TechCrunch suggests that things have gotten too boomy and a Silicon Valley downturn would be great right about now. Stupid ideas are coming into play. Too many people are chasing the easy money.

But a bigger bubble must burst first.

Housing is still vastly overpriced in the Bay Area. Prices and sales are falling in other parts of the nation, but for reasons that defy all logic (at least mine) median home prices continue to rise. And said house is a literal piece of crap that will make practically anyone, anywhere else in the country say, “You paid how much for this?”.

If you want to hear about stupid investments, forget the latest Web 2.0 VC round. Try an interest only loan for an $800,000 home that the “owners” will never pay off completely, where the only “exit strategy” is to flip by selling to a bigger fool. That’s what people here have resorted to.

If you live in the Bay Area, I wouldn’t be concerned about a Web 2.0 bust. For serious pain and turmoil, just imagine real estate levelling off - it’s much more likely. Way, way, way more Americans have a literal vested interest in real estate than Web 2.0. And a serious housing downturn as this area had in the early nineties could very well set off a Web 2.0 bust.

I think the housing bubble collapsing is a much, much, much bigger concern than some random CEOs calling up Mike Arrington and crying for coverage.

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