Bay Area home prices edge up as IPO anticipation builds

Bay Area home prices edged up in February and sales slowed as buyers and sellers wait to see what impact an onslaught of initial public offerings will have on the real estate market.

“Everyone I talk to is aware they have a window before the IPOs come to pass,” said Cooper Gaines, a Zephyr agent in San Francisco. “Sometimes it’s almost tangible, their sense of urgency.”

The median price paid for a Bay Area home or condo rose to $770,000 in February, up 5.5 percent from January and up 2.7 percent from February a year ago, research firm CoreLogic said Thursday.

The number of new and existing homes and condos sold in the nine-county area was 4,354, up 12.9 percent from January but down 12.8 percent year over year.

February is not a particularly good bellwether for the real estate market. Most of those deals were entered into in January and February, which are “two of the slower months and tend not to be predictive of the year,” said Andrew LePage, an analyst with CoreLogic.

 Bay Area home prices edge up as IPO anticipation builds

Everyone now is waiting to see what will happen next as the busy spring selling season gets under way amid an expected rush of initial public offerings and a sharp drop in mortgage rates.

One of Cooper’s clients who works at Lyft just bought a home in Oakland to avoid competing against more senior employees. “He said, ‘I have to buy now, I can’t compete with people ahead of me in options.’”

Another client, John Marino, is waiting to put his condo in Hayes Valley, a stone’s throw from Uber headquarters, on the market. “It seems San Francisco is going toward being a huge tech city. So therefore I want to see how it all fleshes out,” Marino said.

“I’m trying to figure out long-term do I want to stay in corporate America or do I want to get rid of all the stress and anxiety, simplify my life, buy a home in Palm Springs and not have a mortgage,” he added.

Marino bought the condo with parking 10 years ago when it was new. “I just know if I waited until Uber and Lyft go public, I would have a better chance of increasing the value of my condo. It has already tripled in price.”

Marino, 58, said one of his “biggest apprehensions” is that “if I leave the San Francisco market I will never get back in. I need to be committed to moving.”

Renaissance Capital estimates that 180 companies will go public on U.S. exchanges this year, raising a total of $60 billion. That includes Levi Strauss, which went public last week, and Lyft, which debuts Friday.

Tales of the

housing crisis

Housing is the Bay Area’s most troubling issue. Whether you are a buyer, seller, renter, landlord, builder or investor, the availability and affordability of housing are everyday concerns. As part of its continuing coverage, The Chronicle wants to hear the story of your housing experience.

Tell us your story: www.sfchronicle.com/housingstories

It also includes likely IPO candidates Uber, Pinterest, Slack and Postmates, all based in San Francisco, and Zoom in San Jose. It does not include a few large Bay Area companies such as Airbnb and Palantir, which could go public this year but probably won’t, said Matthew Kennedy, a strategist with Renaissance, which manages IPO-focused exchange traded funds.

Kennedy said 2019 probably won’t surpass 2000, the record year for IPOs, when 406 companies raised almost $97 billion. Of course, many of those IPOs went belly up not long after.

Andy Hart, a managing partner with Delegate Advisors in San Francisco, said he thinks there will be “a scramble for homes” in the $1 million to $4 million range in San Francisco and surrounding counties. He warns clients, however, not to buy homes based on how much they think their stock is worth before the lockup period expires. “I’ve seen that rodeo before, when people thought they had a certain amount of money and then they didn’t.” He advises them “to be patient.”

Recent research shows that IPOs do raise home prices somewhat, with the biggest gains coming closest to the headquarters of companies going public. The impact fades the farther you get in distance and time from the IPO.

Most employees can’t sell their company stock or options until a lockup period, typically six months, expires. Somewhat fortunately for buyers, the IPO bonanza is coming at a time when the real estate market is taking a breather and mortgage rates are dropping.

“The intensity of the market we had a few years ago is not there right now,” said Jeannie Anderson, an agent with Alain Pinel (soon to be Compass) in San Francisco and Orinda. “A lot of the foreign money we had a few years ago isn’t there. That has made somewhat of a difference. A lot of people who did extremely well with their investment have sold their properties, taking the money while they can. A lot of people have gone out of state,” she said.

Anderson has represented five separate families moving from the Bay Area to Coeur d’Alene, Idaho, in the last three years in search of cheaper housing.

Freddie Mac reported Thursday that the average rate on a 30-year fixed-rate mortgage dropped to 4.06 percent this week, down from 4.28 percent last week. That was its steepest drop in a decade. In mid-October, that rate got as high as 4.9 percent. Mortgage rates follow the 10-year Treasury yield, which took a dive last week after the Federal Reserve voiced concerns about a slowing economy.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender

Article source: https://www.sfchronicle.com/business/networth/article/Bay-Area-home-prices-edge-up-as-IPO-anticipation-13724238.php

This entry was posted in SF Bay Area News and tagged . Bookmark the permalink.

Comments are closed.