Real Estate Trends. By Norma Flaskerud
May 04, 2019 10:09AM
Real Estate Trends
Job Market Keeps Real Estate Market Strong
“How Upcoming Tech IPOs Could Affect the Bay Area Housing Market” is the title of a Forbes article written by Mary Ann Azevedo. I don’t have space in this column to share all of the information, but it is fascinating to consider that the trickle down of the IPO wealth being created may affect us here in central Contra Costa County: realtors, potential home buyers, and sellers alike. San Francisco based Lyft went public, as did Pinterest and others like Slack and Zoom have or will.
Our real estate prices have been increasing for years, but last June we saw the market come to a screeching halt; of course we realized it in retrospect. The home sale market stayed soft and slow through the rest of the year, causing sales and prices to slump. But once 2019 got rolling and after the rain let up, buyers came out, thrilled that interest rates had softened after the 2018 increases, and they began home shopping in earnest. Sellers have benefitted from multiple offers yet again, and prices are slowly inching up here in central Contra Costa County.
The suggestion that IPOs will create more wealth is real. Early employees of the going public tech companies will have cash for down payments. Typically, the lockup period is less than a year, and the increase in Bay Area buyers may number in the thousands, with most impact being near the tech company headquarters. We tend to see commuters to the city and Oakland in our area, plus many who work from home. It’s like a switch getting flipped on all of a sudden, and it should increase demand for homes while stopping the modest slide in home prices seen in the latter half of 2018. This effect could last for the next few years since many employees joined these startups over the past couple of years, and their stocks may take time to vest.
In addition, employees of companies that go public may receive bigger paychecks following an IPO, or shares of the company they already owned could grow in value. Those extra funds could then make it easier for these workers to come off the sidelines and become first-time homebuyers. In turn, that will create more competition for homes, particularly in neighborhoods near the company’s headquarters, which could then price other consumers out of the market, said Zillow. Something to keep in mind if you are wondering if our real estate market will crash again; not too likely in foreseeable future.
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The Flaskerud Team
Norma Hawkins Flaskerud and Erik Flaskerud
Remax Accord Realtors