After a decade of feeling invincible, the tech industry is suddenly facing something new: financial insecurity. Valuations are down, layoffs are up, startup funding no longer feels limitless, and an air of fear has started to permeate the sector, as bosses and workers alike adjust to a harsher version of reality.
In cities like San Francisco, New York, and Miami, luxury real estate agents are starting to notice the effects of the tech downturn on their business, they tell Motherboard, as wealthy tech clients grapple with the fact that raises, bonuses, and job offers no longer seem as inevitable as they did a few months ago.
“The elephant in the room these days is that there’s a recession coming,” said Karley Chynces, a blockchain-focused real estate agent at Sotheby’s International Realty in Miami. Nationally, rising interest rates for home loans have combined with record home costs to price out potential homebuyers.
But within the pockets of the country where tech workers tend to throw money down on housing, interest rates are less of a concern than the decline of tech stocks and the constant barrage of layoff announcements, according to conversations agents have had with their clients.
“It’s wider than just interest rates because a lot of people in New York City actually purchase in cash,” said Manhattan real estate agent McKenzie Ryan. There are signs that the housing market may have temporarily peaked. Asking prices have slipped ever so slightly, homebuilders are starting work on fewer homes, and mortgage demand is the lowest it’s been since 2000.
For now, home sales are down most among the cheapest homes, where buyers are more price-conscious and typically affected more by interest rates changes. But a spokesperson for the real estate brokerage RedFin, which analyzes housing data, said markets like San Francisco are “definitely cooling.” A recent RedFin analysis found sales of luxury homes were down almost 18 percent in the three months leading up to May, compared to a 5.4 percent drop among non-luxury homes. (RedFin defines “luxury” homes as those in the top 5 percent in price in a given area.)
Business at the Pennsylvania art industry firm where he worked had been brisk until a few months ago. But lately, jitters about the crashing stock market and a possible recession had many regulars tapping the brakes on new purchases.
“Over the last three months, sales dropped 50 percent, then 50 percent again, until they were basically at zero,” said Miller, 32, who is worried about future job prospects. “Most of our clients were in real estate or tech, and they’ve just disappeared. They don’t want to spend $10,000 on a painting if they’re worried things are going to crash in a few months.”
The labor market, until now a pillar of economic resilience, is showing cracks. Job growth is slowing, unemployment claims are ticking up and several big companies, including Apple and Meta, are putting hiring plans on hold. There are signs that more firms are slashing jobs in industries as varied as tech, advertising, health care, finance and law.
Workers are picking up extra jobs just to pay for gas and food Convenience store chain 7-Eleven laid off 880 corporate workers in Texas and Ohio, following its purchase of a rival chain, a company spokesperson said an email. Ford is planning to cut 8,000 positions in the coming weeks, Bloomberg News reported. Meanwhile, electric carmaker Rivian is cutting 700 positions, delivery start-up Gopuff is laying off 1,500, and mortgage lender LoanDepot is slashing 4,800 jobs this year, according to reports.
