We proposed 3 factors to project Bay area’s future:
1) Great job
2) Land shortage
3) Lack of speculator

In my opinion, point 1) right now is less of an advantage. Since 911, Bay area has been losing jobs. Although Bay remain as a favorable place for job creation and VC investment, due to the high operating cost such as rent, human capital cost and higher taxes, this advantage is peaking out. However, 2 and 3 are absolutely true and will remain the major factors to maintain a mid term (5-10 year) above-inflation price appreciation.

On the macro scheme, Bay area’s first multi-decade aggressive growth period has clearly ended, and it’s now entering its middle-age period, in other word, a maturing period. Bay area’s good blessing is now becoming more of a curse, especially, in terms business operating cost and human capital cost. Therefore, this area will start to pay some of the cost that it had never had to worry about in the past. Big companies like Cisco Systems, Intel and many others are stopping hiring locally, at the same time increasing hiring in less expensive places like in India.

BA is maturing like a young man changing to a middle aged man. I don’t project the future growth will be as robust as it has been in the past. Having said that, BA will remain healthy while it’s aging, price will continue to go up for the mid term, may be for another 10 years. VC activity will remain vibrant due to concentration of readily available engineers and programmers. However, please bear in mind that this very innovation of globalized web access is actually depriving Bay area of its key advantage: location advantage. Because easy and fast web access is going to allow people in the rest of the country and even people in the rest of the world to work for the same company, for example, Cisco Systems, while not having to stay in Bay area.

Therefore, basing past 3 decades of hyper-growth pattern to predict Bay area’s next 3 decades will be risky to say the least.