Back when the California economy was the fifth largest in the world, the Wall Street Journal used to track it very closely. Now that we are the ninth largest, the Journal still stops by once in awhile for an in depth review. Yesterday's edition did just that with a huge article on the economy and a large one on our real estate.
Quoting from the first piece, an economist from Beacon Economics notes that "L.A. is an extreme example of California's 'barbell economy,' with a greater than average share of college graduates, but also of people who haven't finished high school." A Claremont-McKenna College spokesperson for a cost-of-doing-business survey adds that "the most recent survey ranked 421 cities; 16 of the 50 most expensive were in California, including San Francisco and L.A." We are still hanging tough with the 48th best business tax climate as well--and that is before this November's election where the ballot has only potential downsides for our rating.
The "barbell economy" is causing a barbell real estate market as well with Silicon Valley leading the way on the heavy ends of the barbell. Per the Journal, "in the second quarter, the median price of a single-family home rose in 61% of Bay Area communities, compared with a year earlier, according to research firm Dataquick." We've seen that in B'game pretty clearly. The question is how much since the article shows Palo Alto up 14% and San Mateo up 2.4%. My guess is we are somewhere in between, but the flight from S.F. could put us on par with Palo Alto. And the Drive-in project certainly will contribute to putting us on the higher end in the medium term.