Real Estate Watch – Voak Homes
Confusion Slowing the Local Market
While San Diego as a whole is experiencing a slight slowdown in real estate activity (a reduction of 4.5% in sales year-over-year), the North County inland market (Poway Unified School District, Scripps Ranch, and Mira Mesa) is seeing a much more pronounced lull in the market to start 2018 (a 14.1% reduction). I believe there are three main reasons for this, and all of them revolve around future uncertainty.
The first two affect the upper end market throughout the county. Those factors are the new tax law and recent volatility in the stock market and interest rates. We know the new tax law is going to hurt California homeowners, but until people meet with their accountants to prepare 2017 taxes, they probably won’t have a firm idea of how much it will impact them. This type of uncertainty causes people to become conservative and put off major purchases like housing. Hopefully, once people know what the increase will be next year, they will be more comfortable making a move in the housing market.
You can count on the fact that the stock market is going to be more volatile and interest rates are generally going to move up. While that is not helpful, the one thing you can do if you are considering a home purchase is get your down payment out of the stock market. There’s nothing worse than finding your dream home on Sunday and watching your down payment disappear on Monday if the market falls.
The third area of uncertainty affects us more in PUSD. That is the uncertainty surrounding the attempted takeover of Qualcomm by Broadcom. Poway School District is a magnet for engineers who want their kids to get a good education. Two years ago, when there was an announced layoff at Qualcomm, the local housing market really slowed down until layoff notices went out, and as soon as people knew they still had jobs, the market took off. I have talked to several of my Qualcomm clients and they are indeed sitting on the sidelines until the situation is resolved.
Given that uncertainty over taxes will likely last into April and the Qualcomm situation may take another 30 to 60 days to resolve itself (as of this writing), I anticipate a slower market through March and then a very strong May through July.
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