International Forces on Downtown San Jose

The short sale has its genesis in pure hardship. The mortgagor is financing a debt that is embarrassingly under secured and they wonder what economic sense is inherent in such conduct. The lender is facing commensurate frustration as their security evaporates by the day. At some stage both have to act according to what is in their best interests.

Often unemployment will initiate difficulty for mortgagors paying their monthly interest payments however, even when gainfully employed, what was once a reverent reduction of a mortgage debt each month has now become a bottomless pit with no hope of recovery is seen on the horizon. When an investment suddenly turns into disinvestment, it’s a sign that the local economy is not in good health. Demand has a remarkable ability to endure, but even this can be quenched by a reduction in household income. For those employed by big business in the South Bay, the effects of lagging demand worldwide may well have seen local redundancies take effect as employers seek to reduce operational cost in anticipation of slowing demand. A few lost factory jobs China may be just the catalyst a small local economy needs to then see a handful of short sales dramatically affect neighboring property values. In this way a substantial amount of unemployed in China will see the same in the South Bay area as employers scale down labor expense to compensate for lower Chinese demand of their innovation. The local jobs that are lost can do an equal amount of damage to property values as neighbors are pitted against each other in a game of musical chairs. The desperation to sell is overwhelming.

Companies based in the Silicon Valley may find that the offshore market capitalization they are relying on to fund ongoing programs and expansion has experienced a dismal result. Due to international stock markets flailing under the pressure of their very own brand of recessionary mayhem, widespread redundancies in the technology sector of the Valley will then be revealed. In this way, global trading partners share each other’s problems rather generously.

Indeed, local business people often provide the capital for large enterprises, and they too have experienced their capital reserves vastly reduced by the US stock market collapsing and profits stalling. Investor sentiment will remain depressed in this scenario, and capital may flee the shores of commerce, to safer havens such as the commodity markets. A flight to quality such as this will often mean the price precious metals rise sharply.

To the employees left behind this is of little recourse, and yet further headway is made toward the landslide of the local property market.

As the world looks toward the US property market in a bid to identify some starting point for economic recovery, it appears that US property remains a valuable indicator of the level of asset prices the word over. Despite the fact that South Bay property prices are contingent on many other factors, it remains the case that the global economy is predicating its own forecasts for economic recovery on the resilience of key local markets such as those housing residents of the Silicon Valley.

Posted by Eureka Expert on Mar 13 2010. Filed under Economy, Housing, Short Sales. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry