A lot of people have asked about the housing market recently. Many of those questions are in the context of layoffs here in the Bay Area or the net population loss in California spanning the last several years. I almost get the impression that they are envisioning some kind of The Grapes of Wrath migration, but in reverse.
Before getting tangled up in the (grape) vines, let me assure you that the Mid-Peninsula thus far is doing what it always seems to do - defying national trends and shrugging off bad news when it comes to single family homes. However, there is one wildcard that could have an impact. But I get ahead of myself.
While it is true that California has seen a recent net population loss and layoffs have occurred here on the Peninsula, the result has not been significant enough to rebalance the market. From a housing availability standpoint, we have had a structural undersupply (e.g. home construction not meeting demand) for many decades. At this point, the undersupply is estimated to be in the hundreds of thousands of housing units, a formidable deficit. It is no surprise therefore that for every seller, there is another highly qualified, well-capitalized buyer anxious to become a homeowner.
That said, the one current wildcard that could upset our housing market is the war with Iran and associated geopolitical issues. In particular, if the war expands or continues for a prolonged period of time, our national economy could suffer. We have seen the early impact on the price of gas and analysts are already cutting their GDP forecasts. A decrease in GDP can equate, at the corporate level, to (further) hiring freezes, layoffs, etc. Tying this back to our local housing market, when job security feels at risk, buyers tend to hit the pause button. Less competition for homes means more measured bidding and stagnant or lower prices.
Thus far, we have not seen much disruption. In reviewing statistics in our office since the start of the war, there has been no significant dip in buyer demand, with the majority of sales receiving multiple offers and selling above their list price. However, whispered conversations among agents indicate that the market may be on the verge of softening. Should the war continue, should our economy start to falter, and should stocks start to reflect growing concerns with declining values, then that may test the resilience of our housing market. Just don't forget that, as we learned in the Great Recession, one of the great things about our area is that we tend to be among the last to feel such economic blows, and among the first to recover.
