Q: The recently fizzled IPOs such as Uber and WeWork seem to be weighing on the tech market which is crucial to the Bay Area economy. Do you think this shift will cause a drag on the real estate market or is this just a ‘bump in the road’?
A: In the era of rapidly growing tech companies, the market would indicate that it's great that these companies are growing so fast, but because they are not turning a profit doubts begin to arise. I presume there is going to be a major shift in the way the market views technological unicorns which will affect the amount of money being generated by these IPOS. With that being said, they are a relatively small part of our economy and the big players like Google and Amazon are still making money. These are the companies I track more closely in terms of analyzing the real estate market. Unfortunately, the nature of the market is that it is always changing; this time last year the market fell dramatically but it has since bounced back making the market incredibly hard to predict.
Q: What’s your outlook for the Bay Area market in 2020?
A: Bouncing off of the last question, I think its crucial to point out that real estate market can be affected by a bewildering number of political, economic, and global factors that are exceedingly difficult or even impossible to predict with any accuracy. Over the past 30+ years, the period between a recovery beginning and a bubble popping (or a lesser adjustment occurring) has run 5 to 7 years. We are currently about 7 years into the current recovery, which started in early 2012 (in San Francisco; later in outlying Bay Area counties), but the market has historically bounced back to peak prices. 2008 was an anomaly and as
long as one doesn’t have to sell during a down cycle, Bay Area homeownership has almost always been a good or even spectacular investment. The best way to overcome cycles is to buy a home for the longer term, one whose monthly cost is readily affordable for you, ideally using a long-term, fixed-rate loan.
Q: When is a good time to buy?
Several factors play a role in this question, especially because we have been in a large up market and San Francisco has continued to appreciate.
If you’re buying now you should be buying for a longer term, and I would attach these conditions:
1)
Buying a home you can afford right now
2)Long term interest rate, fixed loan
3)Having a reserve for emergencies
