Although volatility in the stock market is making buyers nervous, real estate experts continue to claim Silicon Valley's housing market will stay strong.
Real estate guru Carole Rodoni recently told members of the Silicon Valley Association of Realtors that despite "choppiness" in the economy, "all will be well in Silicon Valley because this is Silicon Valley. It's a place everyone aspires to be at, to work and live in, and be."
Rodoni, a Bay Area real estate expert who formerly served as president of Alain Pinel Realtors and now operates Bamboo Consulting, Inc., said because it is a global economy, what happens around the world affects the perception of business and real estate. Some companies are not earning as well as expected. Some countries around the world, especially China, are experiencing an economic slowdown. Oil is down because its price is being controlled by Saudi Arabia, which she believes wants to monopolize the market. These conditions have created instability in the stock market.
Expect stocks to stay mostly flat this year, and expect the economy to only grow between 2.3 to 2.4 percent. Interest rates may rise, but not by much, said Rodoni.
As for real estate, Rodoni projects only a single-digit appreciation in homes this year. She indicated sales are taking longer, even extending to a 30-35-day close, because of delays caused by the new TRID (TILA-RESPA Integrated Disclosure) rule. Another reason for delays is the C.L.U.E. (Comprehensive Loss Underwriting Exchange) report, which insurance companies require before closing of escrow, is no longer readily available from natural hazard disclosure companies, so it is taking buyers longer to obtain the report.
Moreover, according to Rodoni, the real estate market today is different from four months ago. The market is beginning to rebalance a bit. She explained there are currently two areas and degrees of inventory. The high-end market is in transition and slowing. There have been cancellations because of stocks going down. The lower end, however, will be "on fire." She noted the East Bay housing market will do better this year, as families priced out of Silicon Valley head to outlying areas where homes and rents are more affordable.
Due to the fluctuating stock market, Rodoni said buyers will be skittish this year. Realtors will have to "re-educate" their clients. "Buyers are watching, hesitating, and standing by. They are still interested, but they know the market is changing. They already get it; sellers don't," said Rodoni.
For sellers, the key is pricing. "Do not overprice. Sellers need to get real. Sellers cannot play games. The market rules are different now," she warned.
Timing is also important. The real estate consultant reminded Realtors that millennials do not like homes that sit on the market for too long because that gives the appearance that these homes are not the best in the market.
Despite the high-end market slowing, Rodoni believes Silicon Valley, with its location and booming technology, will continue to grow. She explained tech blew up in 2000 because it was new and nobody could figure it out; now, they have, and it has blossomed. Even digital currencies like the bitcoin are becoming an acceptable form of currency. While not all start-ups will succeed, she believes companies like Google, Hewlett Packard, Facebook will continue to do well.
"Real estate is still an asset people aspire to buy. It will be a choppy year, but we're (Silicon Valley) still the engine driving the world and everything will be okay," Rodoni told the Realtors.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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