Are you enjoying election season as much as I am? I know, I know, such a bummer it’ll be over in a week! 🤢
The U.S. presidential race and the future makeup of Congress remain tight, casting a shadow of uncertainty on both politics and our real estate market.
Inventory has been piling up in the Bay Area, and prices are definitely softening up as a result. Many people have been asking me if this is a direct result of the election, and I confess, I really have no idea. But this is what I do know:
Right now, there are over 6,300 active listings in the Bay Area, and about 60% of listing inventory has been on the market more than 30 days (not including “coming-soon”). 3,750 listings – 35% – have been on the market more than 60 days; 2,500 listings (24%) more than 90 days; and 800 for over 6 months.
In higher price ranges, the numbers are worse:Â 36% of $5m – $9.999m listings, and 56% of the 180 $10m+ active listings have been on market for 4+ months. 37% of $10m+ listings have cumulative Days on Market over 6 months.
There hasn’t been a buying opportunity like this in quite some time. If there’s a home you’ve had your eye on that’s been lingering on the market, it may be a once in a blue moon opportunity to actually get a lowball offer accepted in the Bay Area.
However, once election outcomes are clear—whether days or weeks after Election Day—macro fundamentals are expected to reassert themselves, guiding stock and real estate markets forward.
UBS Global Wealth Management has set new targets for the S&P 500, projecting an 8.5% gain by mid-2025 and 13% by the year’s end, pointing to favorable conditions for investors to reengage with the market.
Let’s look at the fundamentals that support this optimistic outlook.
Earnings Growth and AI Investments Powering Profitability
Robust consumer spending is proving resilient, powering steady performance across sectors. This week, major players in tech—Alphabet, Amazon, Apple, Meta, and Microsoft—will report, offering insights into trends like AI investments which it is believed will support continued growth. UBS is anticipating an 11% earnings expansion in 2024, with further gains in 2025, as disinflation and a stable consumer base drive profitability.
Interest Rate Cuts Offering Market Support
The Federal Reserve’s recent 50 basis point cut is set to reduce borrowing costs, with another 25 basis points widely anticipated post-election. Many analysts expect another full percentage drop in 2025, bringing rates down from 5.5% to a normalized 3.5%. Historically, lower rates have boosted the real estate market, and it is expected that this trend will continue, creating an environment that encourages buyers and sellers to engage with the market.
Economic Resilience
Despite global challenges, the U.S. economy shows remarkable strength, with solid GDP growth, low unemployment, and robust consumer spending. This resilience, combined with effective Fed policies since the COVID era, has managed to curb inflation while keeping people employed and averting recession. Though there are still hurdles ahead, our economy is on firm ground, paving the way for continued expansion.
With these fundamentals in play, buyers and sellers can look forward to a potentially favorable market ahead, even as they keep a cautious eye on political shifts, interest rate adjustments, and the eternal pressures of supply and demand on real estate pricing.
ÂSilicon Valley Luxury Homes for Sale
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