Sound Off: How do volatile days on Wall Street affect Bay Area real estate?

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Herman Chan





Jeffrey LaMont


Photo: Jeffrey LaMont


A: The strong real estate market we have seen for the past four years in the Bay Area (including the primary market I work, the San Mateo Peninsula) is a result of the incredibly strong demand for housing and a lack of supply of homes for sale.

In short, there’s an imbalance between supply and demand for housing. Strong job creation in the biotech, high tech, social media and medical sectors spurs demand. At the same time, continued low interest rates and very good public schools in many of our local communities entice potential home buyers.

The affect of the recent volatility in the stock market on Bay Area real estate really depends on its impact on those demand factors. Strong job creation will remain. We live in the area of innovation and most of the innovative Bay Area companies will continue to hire and expand their operations and revenues.

One potential effect of the stock market volatility may depend on the ability of home buyers to put large down payments on homes they wish to purchase.

Stock market volatility will have some affect on the rate of increase in home values and the strength of the Bay Area real estate market, but it’s likely to be pretty muted and much less of an effect than it could on markets outside of the Bay Area.

Jeff LaMont, Coldwell Banker,

(650) 558-6886,


jeff@jefflamont.com

A: Market corrections don’t always feel good, but they are an integral part of a healthy market increase.

It’s actually a good thing to have corrections every now and then. Markets simply can’t always head one direction without pulling back from time to time as a healthy measure.

Similar to the recent earthquake we had, our markets need to release a little pressure in order to defuse the big event. Markets fluctuate and some opportunists see this as a buying opportunity.

These people have had cash on the sidelines waiting for an opportunity. How does this relate to housing? This could cause a slight pause, but most likely if you are in the market you will proceed either buying or selling.

The Fed will most likely hold rates steady in September and we won’t see any increases for the rest of 2015.

Our job market continues to be stable and we have a very robust economy in the Bay Area.

Computerized trading has made these swings much more unnerving and certainly gives investors a moment of reflection.

Since 1950, the SP 500 index has dipped at least 5 percent every year except for these five years ( 1954, 1958, 1961, 1964 and 1995 ).

Matt Heafey,

The Grubb Co.,

(510) 541-1754,


heafey@grubbco.com

A: There were some cancellations, so that speaks a bit to short-term effects.

Some buyers had knee-jerk reactions and backed out after losing a chunk of their money.

But, several properties with offer dates at the time of the dip commanded multiple offers — despite the gloom and doom about the stock market.

I think that the drop spooked the segment of clients whose net worth and income are mainly derived from stock market.

My real estate investors are on edge. Overall, San Francisco and the Bay Area market will be fine long term.

People will always need a roof over their heads.

Lovers marry, people relocate for work and parents always want to get their kids in a good school. We have weathered worse storms than a dip in the stock market. Life must go on.

Herman Chan,

Sotheby’s International Realty,

(415) 787-3450, herman@hermanchan.com

Article source: http://www.sfgate.com/realestate/article/Sound-Off-How-do-volatile-days-on-Wall-Street-6472388.php

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