While many of these tech workers earn high salaries, and some may become the next Mark Zuckerbergs, their financial success is by no means guaranteed. As noted by Susan Watcher, professor of real estate and finance at the University of Pennsylvania’s Wharton School, these are very risky loans.
First, there’s the volatile market. “Home prices, while they have gone up, and only up recently in tech markets like San Francisco, they very well can go down,” she noted. “In fact, in markets where prices are rising and fast…these are the most volatile markets. They’re likely going to see the most ups and downs.”
Second, just because workers earn a high salary doesn’t necessarily mean they have enough funds for a 10% down payment. Many young tech workers have assets that are tied up in stock that may turn out to be worthless.
Many banks are now desperate for customers and turn to mortgages as a means of drumming up profits. Lenders have been courting tech workers at major companies and have been offering similar zero down loans to other high-income professionals such as doctors and lawyers.
While these banks are taking risks, they’re calculated ones as the banks will have assets in the form of pricey homes in Silicon Valley should borrowers default on their loans.
A select number of lenders are once again offering mortgages with exceptionally fast financing and no cash down. While these loans may be reminiscent of the high-risk loans that led to the virtual collapse of the housing market a few years ago, they’re not available to the general public. Instead, they’re being offered to the high-flying tech workers of Silicon Valley.