Real Talk – What Will Upcoming IPOs Do to the Bay Area Housing Market?

I got a text the other day from a friend with a great question – in light of the upcoming IPOs (initial public offering) everyone keeps talking about, she asked if it would be wise to wait to put her property on the market. And she’s not alone – this is the topic du jour with our sellers, our buyers, and agent to agent.

Timing the Market

I’ve learned (the hard way) not to counsel people into trying to timethe market. In my experience, when you have the bandwidth to process your choices and are in the right “head space” to make a move – meaning you’re more sure than unsure that you’re going to make a move – that’s when everything goes the most smoothly. 

That said, there are definitely more advantageous times than others to sell or to buy. My mantra for over a decade now has been simple – spring is the time to sell, fall is the time to buy. 

Historically, we almost always see an uptick in sales prices in spring. It may be a primal nesting impulse or maybe the weather is just nicer. Whatever it is, the spring selling season, generally and with few exceptions, sees the most new listings come to market and the biggest increases in sales prices for the year. 

Fall, on the other hand, is the time to get the best “deals” in housing – with a catch. With a fall purchase, there is on average less inventory to choose from and even though prices do pull back, they are often pulling back from the spring increases. Having fewer buyers to compete with for each listing is extremely helpful, however, and the key to being able to negotiate a “deal” price, which is relative to the comparable properties for sale or recent sales. 

Now About those IPOs…

So will this be the exception to that rule now that Lyft just went public and reportedly AirBnB, Slack and Uber aren’t far behind? Will these potentially newly minted millionaires tip the scale into waiting just a bit longer for that next rush on prices? 

My personal opinion is no. Mostly because if the IPOs don’t do as well as the hype leads us to believe – and there’s plenty of evidence they may not – or if the stock market drops, which highly impacts our market, or we get past the spring selling season into the sleepy summer mode, and/or interest rates creep up again, then we may go back into a correction mindset. And when it corrects, it can and likely will be a bit extreme in the short term.  

There’s an old Wall Street saying that the market takes the stairs up and the elevator down. And we’ve seen this firsthand. In 2018, it took nine months for the stock market to rise 10.5%, and only one month to almost completely wipe out those gains – and consumer confidence in real estate prices escalating along with it. In fact, in December 2018, it looked like we might be headed for a bit of a correction – some say long overdue. 

My real talk take is this: long term, real estate is almost always going to see upward pressure, and that’s particularly true in high-income earning/low land mass area locations like the Bay Area. Short term, however, there are likely to be a few dips in the road. How long they last and how deep they are is pretty much impossible to predict, so I land on my tried and true axiom – spring is the time to sell.

Need help making the decision that’s best for your particular needs? Look me up! 

Looking to buy or sell in San Francisco? Meredith Martin can help. Contact her today for experienced guidance on all aspects of the unique real estate process in the Bay Area.

CalBRE #01224570

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