Does the Government shutdown affect the real estate market?
The most common questions I’ve been asked recently are “How’s the market?” and “Does the Government shutdown affect the real estate market?” As always it depends on location. I decided to look at average sales prices to get more specific in my reply. Take a look at the tables here giving information between houses and townhomes/condos over the four quarters last year. For example, with houses, we saw big gains in Los Altos, Palo Alto, and Los Gatos, though neither Los Altos nor Palo Alto held onto said gains, both ended with 4th quarter average sales below their 1st quarter. In point of fact, every city except Los Gatos and Cupertino ended the 4th quarter with sales below the 1st quarter. As a sidebar, I was slightly stunned to see that in the 2nd quarter, Palo Alto nearly reached an average sale price of $4 Million!
Looking at townhomes and condos, we have much the same picture in that, overall, the market started well and then declined; the biggest increases were seen in Saratoga, Cupertino, and Redwood City, which all ended with a 4th quarter stronger than the 1st. I was surprised to see a huge drop in prices for Los Altos and Palo Alto.
Getting to the second question, “Does the Government shutdown affect the real estate market?” The answer is yes; remember one of the reasons for the falling real estate market in 2018 was the volatility of the stock market, this led to real estate being on fragile ground and the shutdown certainly hasn’t helped it recover.
A continued shutdown has an affect on confidence and anything that affects buyer confidence affects sales as both sellers and buyers worry about the economy and the political environment, in particular.
On the good news side, fortunately we live in the Bay area, Silicon Valley and its surrounding cities are known to hold steady when house prices in other parts of the state and country start to slide. While we did see a downward trend in the 3rd and 4th quarters last year, sales are still steady and the market active. Another way to look at our market is that as a “snapshot in time,” now is a great time for buyers and, let’s face it, most sellers become buyers of another home, so with your buyer’s hat on, the market is better than ever!
Real estate continues to be one of the strongest long term investments a person can make. For example, the average sale price of a house in San Mateo County in 2002 was $786,755, compared to $1,947, 218 in 2018; for Santa Clara County in 2002 it was $659,853, compared to $1,616,683 in 2018; that’s huge appreciation for not only a long term asset, but a place to call home!
Just the Facts Ma’am!
Covering Silicon Valley. All information from the Multiple Listing Service.
Want information for other areas? Comments? Questions? Send me a message, I’d love to hear from you!
