Tale of two valleys: Tech workers’ homes far pricier than Silicon Valley average, gap is widening

Postcard: Greetings from Silicon Valley

A new report from Zillow puts an unsettling number on the growing divide between Silicon Valley’s haves and have-nots.

According to Zillow, the Seattle-based online real estate marketplace, employees of tech giants Google, Facebook and Apple not only live in homes far above the value of the typical local resident, but their homes are appreciating in value at a far faster rate.

Just yesterday, the Wall Street Journal used some of this data to publish a look at the impact of Apple employees on the local housing market.

According to the latest report from Zillow, the average Apple employee’s home is worth five time as much as the U.S. average. Just five years ago, that gap was only three times as much.

In general, of course, Bay Area housing prices and rental rates are exploding. But even withing this real estate gusher, Zillow says tech workers are benefiting at a disproportionate rate.

 

“This analysis highlights the widening wealth gap between tech company employees and other U.S. workers – a gap that is putting increasing pressure on housing markets where tech companies are booming,” Zillow Chief Economist Dr. Svenja Gudell said in a statement.

This echoes a point I made yesterday in a story about my mixed feelings regarding the news that Uber was opening a big office in Oakland.

As a homeowner in that city, the coming wave of tech immigration will no doubt benefit me financially. But it’s going to make life more challenging for those not in the tech industry.

Digging into the numbers a bit, Zillow found, using a mix of housing and census data, that the average Apple employee has a home worth $1.14 million. That’s 27 percent more than the median in San Jose, and 50 percent higher than the Bay Area.

While the Journal singled out Apple, it turns out Google and Facebook employees are doing even better. Their median home values are $1.28 million and $1.25 million respectively.

These gaps are accelerating.

Before 2007, Zillow found that the average Google employee’s home was worth 37 percent more than a typical San Jose home. That gap has grown to 39 percent since then. Facebook and Apple employees have also seen their leads increase.

All of this should be a cautionary tale about bad housing policy and poorly conceived economic development policy. Silicon Valley is enjoying boom times, and other regions want so badly to copy that success.

But, as these numbers indicate, be careful what you wish for.










Alibaba revenue rises 32%, beating expectations despite concerns about Chinese economy

Alibaba Group's San Francisco office.

(Reuters) – Chinese e-commerce giant Alibaba Group second-quarter revenue rose 32 percent, beating analysts’ estimates, even as the value of goods transacted on its platform grew at a slower pace.

Revenue rose to 22.2 billion yuan ($3.49 billion) in the quarter ended Sept. 30, compared with the average analyst estimate of 21.245 billion yuan ($3.34 billion), according to Thomson Reuters.

Gross merchandise volume, or the total value of goods transacted on its platforms on China retail marketplaces, rose 28 percent to 713 billion yuan ($112.2 billion).

The strong performance comes against the backdrop of broader concerns that the Chinese economy is slowing. Those worries have driven down Alibaba’s stock, but have also hit U.S.-based tech companies that have been counting on China as a source of growth.

Alibaba shares closed at $76.35 on Monday, down about 36 percent from their record high of $120 in November 2014. Alibaba’s New York-listed shares were up 8.5 percent in premarket trading on Tuesday.

Mobile revenue nearly tripled to $1.66 billion, with mobile GMV accounting for 62 percent of total GMV transacted on Alibaba’s China retail marketplaces.

Alibaba is branching out from its core online-only shopping platforms in a bid to stem a slowdown in revenue growth and the total value of goods transacted over its websites.

The company reported net income attributable to shareholders of $3.58 billion, or $1.40 per share. Excluding items, the company posted earnings of 57 cents per share.

 










Here Are The MEPs You Should Tweet About Net Neutrality This Morning

MEPS-European-Parliament Today at 1.30pm Members of the European Parliament vote on legislation which — according to independent observers and over 50 of the tech industries biggest players — could threaten net neutrality if key amendments are not pushed forward and added to the new laws. Parliament will hear debate 8:30am-10am CET, then break and vote at 1:30pm CET. The proposal before the Parliament… Read More

Here Are The MEPs You Should Tweet About Net Neutrality This Morning

MEPS-European-Parliament Today at 1.30pm Members of the European Parliament vote on legislation which — according to independent observers and over 50 of the tech industries biggest players — could threaten net neutrality if key amendments are not pushed forward and added to the new laws. Parliament will hear debate 8:30am-10am CET, then break and vote at 1:30pm CET. The proposal before the Parliament… Read More

Tim Cook says Apple Watch sales are still growing

Apple Watch

With Apple set to report earnings today, CEO Tim Cook has already partially answered one of the questions likely to be on investors’ minds today:

How are sales of the Apple Watch doing?

In an interview with the Wall Street Journal, Cook said of the Apple Watch: “We shipped a lot the first quarter. And then last quarter we shipped even more. I can predict without hesitation that we’re going to ship even more this quarter.”

Without hesitation.

There were concerns that, after a burst of buying when sales of Apple Watch began in April, momentum had slowed dramatically. Indeed, a report by market research firm Slice claimed that Apple sold on average 200,000 units per day at the start, but that the pace quickly fell to 20,000 or less per day.

But that report was countered a bit when Apple released its Q3 2015 numbers in July. Although Apple didn’t directly reveal about many units it sold or how much revenue it generated, some estimates based on some back-of-napkin calculations indicated it may have sold 3 million watches that generated more than $1 billion.

Of course, the watch was only available for part of that quarter. The Q4 earnings will be its first full quarter of sales and it would be a bit alarming if they did not exceed the previous quarter’s sales.

And looking ahead to the holiday quarter, Cook sounds extremely bullish. As he notes in the WSJ interview:

“We see customer satisfaction off the charts,” Cook said. “It’s, like, 97%.”

The short-term news is good, it seems. But the Apple Watch is no doubt a long-term play for a company that can afford to take the long view. Over time, the adoption of Apple Pay, which makes the watch even more useful, and new native apps will likely play a big role in whether Apple Watch can become a must-have gadget for the mainstream consumer market.

So it will be interesting to see how well sales hold up in 2016. And whether Apple Watch is another product like the iPad, fast out of the gate, then slow. Or whether it’s a slow and steady hit that becomes more popular as more people see their friends glancing at theirs and suddenly are hit with Apple envy.

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Tesla expects sales in China to overtake U.S. within six years

tesla-red

Electric car maker Tesla is projecting that sales in China will be equal to, or higher than, sales in the U.S. within five to six years, according to comments given to China’s state-owned media agency Xinhua by Tesla CEO Elon Musk before the weekend.

“In the long term, we will probably see equal or higher sales in China than in the United States. That may take five or six years… We are trying to put localized production in China. In the years to come, you’ll see some fairly significant partnership announcements,” Musk said.

“If you look at China’s fundamentals over the long-term, they are extremely good,” he added, but admitted that the company had “made some mistakes” during its initial entry into the country. As a result, Musk said Tesla is currently limiting expansion into new markets.

According to numbers shared by Musk at the event in Beijing unveiling Tesla’s new Autopilot system, the company sold 5,252 cars in China in the first three quarters of this year (by comparison, it shipped 11,580 cars in the U.S. in the third quarter alone).

Beyond that, Tesla is currently installing 84 superchargers and 1,500 destination chargers in China.

Newly-installed Tesla superchargers in Hong Kong

Above: Newly-installed Tesla superchargers in Hong Kong

Image Credit: Engadget

China is a priority market for a growing number of U.S. companies, especially in the tech space — including the likes of Apple and Facebook.

Tesla just unveiled the Model X at the end of September after years of delays, and followed two weeks later with long-awaited driverless car update in beta (more on that here). We also dove into detail on whether China’s plans to boost electric car sales will work.

In any case, expect to see a whole lot more Tesla models hitting the roads in China before long.

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