The crash in Tech Stocks (20% decline in NASDAQ, 50% in Meta, 60% Netflix) ) risks destabilizing the economies and Housing Markets in tech-concentrated metros such as San Francisco, Seattle, Salt Lake City, Austin, and Boston. These regions have a very high share of their economies supported by speculative tech companies.
These tech companies often lose money. In fact, over 60% of the Public Companies in San Francisco lose money while over 50% of the ones in Boston do as well. Being unprofitable was acceptable in the Venture Capital and IPO space for much of the last decade because interest rates and inflation were low.
But now that Interest Rates and Inflation are surging everything has changed. These unprofitable tech companies are going to have a hard time finding new equity and debt to fund their losses later in 2022. And when that happens there will be layoffs and company shutdowns.
This will ultimately come at a big cost for Housing Markets in tech-dominated cities. The real estate in these metros is already very expensive and out of reach for most local home buyers. If a Tech Crash occurs and subtracts from the Housing Demand in a market like San Francisco or Austin, then home prices could crash as well.
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