California, Here I Go
Listen closely in the crowded dining room of Silicon Valley's powerbroker haunt Il Fornaio, or at the $30-cover nightclub Ruby Skye in San Francisco, and you'll hear the conversations taking a new turn. Instead of describing the latest "total performance delivery integration solution" or pining for the days of Ariba (ARBA) at $152, the talk is reminiscent of when geologists first discovered that the state was slowly sinking into the Pacific Ocean: We better get out of here.
Now that the dot-com crash has vaporized the dreams of instant millions, what was until recently the hottest place in the country has for many become like a stock to be dumped. Call it the Bay Area bailout. Some are leaving because, even with six-figure salaries, they are living like college students, crammed into 500 square feet and not saving a dime. Others can no longer afford their obscene rents or mortgages now that they have been laid off. Then there is the cashout crew, those selling their houses for double what they paid just two years ago and resettling in cheaper climes, such as Palm Springs, Atlanta, Chicago, and Austin, Tex.
SNEERS. Their reasons for fleeing may be different, but nearly all agree that the high-tech revolution, with all of its enormous wealth, has made the place so expensive that even doctors can barely afford to live in San Jose. It's so crowded that if you want to see a movie you have to leave hours ahead of time just to get a parking spot and a seat. The two-hour commutes to travel 25 miles, the $1 million-plus tear-down houses, the crowds, the blackouts, the taxes, the cell phones, the sneers--they just don't seem worth it anymore. "We were living like I worked at Starbucks," says 33-year-old Megan Tobin-Jones, a former $140,000-a-year marketing vice-president at content management company Trapezo Inc., who recently moved to Summit, N.J., with her husband and two kids. "We feel like we got out just in time."
Nowhere, perhaps, is the trend more evident than in the once exploding real estate market, where agents across San Francisco and Silicon Valley say many of their sellers are joining the out-migration. "It's the recurring theme among the sellers I'm representing now," says Dan Bunker of San Francisco's Zephyr Real Estate. "They want to get out before things get worse." Whereas just a year ago you couldn't find a dumpy studio in San Francisco to save your soul, landlords are now doling out signing bonuses to renters by kicking in a month free. Bidding wars for high-end homes in the hills are over, with prices falling 25% off their year-ago high. And rental listings in the Bay Area are at their highest level since 1992, with the corporate rental market down 50%. "It's not like there are any jobs to go to, so people are leaving," says Zoya Smithton, CEO of Bay area rental-unit provider American Marketing Systems Inc.
BLOATED. Even those who have made plenty from options are taking flight. Mark Milinkovich, a 39-year-old former manager at Cisco Systems Inc. (CSCO), recently resigned after seven years to return to his home in Ottawa, Ont. As Cisco grew, he says, its lean, mean cowboy culture was supplanted by a bloated bureaucracy of complacent, vested employees that Milinkovich calls VIPs (vest-in-peacers)--who weren't as much fun to work with as the original crew. He also got tired of living his life on airplanes, all to bank a few more zeroes, and then return home to see the camping equipment he bought for trips with his 3-year-old son languishing unused in the garage. "My son is now 8, and I have yet to take him camping," he says.
For those staying put, there's hope that now that every fortune seeker isn't heading for the Valley, the traffic may ease, the crowds may thin, and housing costs may sober up. "From a regional perspective, we're getting back to a pace that's sustainable," says Doug Henton, president of Palo Alto advisory firm Collaborative Economics. Why, just the other day, an 1,800-sq.-ft. tear-down in Atherton actually sold for under its asking price. The bad news? It was still $3 million.
By Michelle Conlin in New York, with Doug Robson in San Mateo, Calif.