http://realtytimes.com/rtpages/20041020_siliconvalley.htm

The Silicon Valley is located south of San Francisco in beautiful nothern California. In addition to year-long sunny, 80 degrees weather, the Silicon Valley is also the home of the DotCom boom, Stanford University and three public high schools that rank top 50 in the nation.

The Silicon Valley is also known for its ridiculous home prices. In the city of Palo Alto,for example, it is not unusual for average 3 bedroom cottage to cost over 1.5 million. Many expected the real estate bubble to burst when recession hit in 2001, however, the houses whose prices dropped significantly are the gated mansions in Los Altos hills or Atherton that the average middle-class household would only dream of purchasing. Purchasing homes thus becomes a significant problem for young couples without established savings or credit.

Recently, the real estate prices of the Ardenwood area in the city Fremont across from the bay are rising at a noticeably faster rate.. but why? The theory of price formation in networks tells us to raise the prices of items in constricted sets in order to create a perfect matching. Although the Dot Com boom is over, the internet and computer industry is still growing rapidly. New softwares, games, electronic devices (iphone anyone?) are constantly being developed and making the silicon valley residents wealthier and wealthier. The income of the buyers is increasing, thus even though the real estate price keeps climbinb, the “total energy” in this network have not yet diminished.

since prices only rise within constricted sets, a good real estate investment strategy is to seek areas near silicon valley that are affordable at present and expected to attract people in the future. During the boom, a large proportion of people flooding into the silicon valley area are experienced, age 40+ individuals. Nowadays, computer science knowledge is renewed faster than ever, and the majority of people settling into that area are engineers fresh out of college or graduate school. Since computer science is one of the most promising industries today, this trend is expected to continue.knowing this, investors should then look to areas near the silicon valley with good elementary school districts, such as Fremont’s Ardenwood area. Fremont school district’s high schools are no match for the nationally famous Gunn and Lynbrook high schools in the Silicon Valley, but their elementary schools are ranked top in the state. although the real estate prices in the heart of the silicon valley is still rising, it is rising at a much slower pace than did before. young couples with young children and limited savings tend to look for housing that will satisfy their demands at presence, namely elementary education. Although the weather and location of the Silicon Valley is attractive and thus creates a constricted set, the unreasonable prices are pushing more and more investors to look for other options that will satisfy their current needs. The ardenwood area’s prices are already climbing at a faster rate for this particulary reason. In the future, as more and more children of educated couples enter the school district, the high school and middle school’s quality will begin improving too, and perhaps yet another silicon valley will be born.