So, how's the market? Always a popular question of those of us in the business!
The real estate market is forever in a state of flux. While much of the time our local conditions can best be described as, "<adjective> hot," local and national/international circumstances can dramatically - and often quickly - turn those conditions from hot to downright chilly (but never the other way around!). For example, the Dot Com Bubble bursting in the early 2000s and the Great Recession several years later both threw a huge wet blanket on real estate for an extended period. Likewise, back when high speed rail was in the news, home values along the CalTrain corridor suffered, and more recently, the California wildfires dramatically impacted home insurance policy prices and availability, and as a result, home prices, particularly in higher risk areas.
Our most recent inflection point appears to be April 2, 2025, also known as tariff "Liberation Day." Prior to April 2nd, the market was humming along. Home prices were steadily rising, interest rates were holding steady or edging down, and there was a feeling that real estate was headed towards another banner year. Then the tariffs were announced and the market turned frosty overnight, which was not surprising given that the Dow dropped by over 10% in the days following the announcement. Interestingly, even though the Dow has now rebounded to pre-Liberation Day levels, home buyer confidence and the housing market generally have not.
So, how is the market? Crazy with a hint of whiplash! Even though the number of home sales has largely recovered over the last 10 weeks or so, home buyers are definitely more cautious when making offers. Within our office we are regularly seeing multiple offer situations where some or even all of the offers are below the list price - which would have been a noteworthy rarity prior to April 2. And contingencies in those offers are a much more regular occurrence now than previously.
That is not to say that certain highly desirable homes, neighborhoods and/or cities such as Palo Alto, Cupertino and Sunnyvale aren't still hot; in many cases they are showing signs of their former craziness. But in general, buyers today both lack urgency and are more cautious and skittish than in the first quarter. In addition, buyer reaction to more recent negative tariff news has come swiftly, while more positive tariff news (e.g. the easing of previously announced tariffs) does not result in a corresponding rapid positive impact on the market.
Our expectation is that when we see an extended period without any tariff news coupled with stock market stability and steady interest rates, then the local real estate market will start to return to our previous norm - but this is likely to take on the order of months, not weeks. For now, buyers continue to grapple with high levels of uncertainty. For those actively looking, now may be a prime opportunity to lock in a home at a more attractive price and with reduced competition...or maybe the nadir is just around the corner. Crazy, I know!
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