Ukraine, Inflation and Stock market volatility on Home Prices

 It is hard for me to believe that the Stock Market's volatility and the upward pressure on inflation from the Ukrainian situation will not affect home prices.

Saturday, March 5th weekend Wall Street Journal had some sobering comments on source of funds that support our housing market.  $1.17 billion in Initial Public Offerings have been pulled from market issuance in February.  IPO's, as they are referred to, have been a source of funds that have fueled our real estate market all through the  stock "Bull Market".  Now the stock market is officially in a "Bear Market" there is a question on how much exuberance will continue to carry over into buying frenzy.  I still do not believe that our real estate market is on the verge or even near the end.  At most, the market should settle down to an even buyer and seller situation of equal representation.  I have already seen so in some recent price cuts.  $110 million listing in Woodside has been cut $26 million in one month time!  It seems rather soon, to me, that would have occurred without some stimulus externally.

As I look at the overall real estate market in the 5 county area, there is a clear sign that listings have increased substantially, in my opinion, and sales have come down to list prices.  

A recent report shows that the Luxury high end side of the market a disturbing indicator.  In Santa Clara County the average list price of a Luxury Home has declined in the past 30 days as of February 25, 2022 by 11.95% and average sale price decline of 5.11%.  In San Mateo County the average list price is down 12.8% and average sale price is down 20.61%.  

When I look at that same report, counties outside of our area it gives me a good indication of where buyers are going to.  In Alameda County Luxury listing prices were up 2.6% and sale prices up 6%.  Contra Costa County high end Luxury listing prices are up 6.9% and sale prices are up 14.66%.  Monterey is different, Luxury listing prices are down 10.89% with sales not available.  Santa Cruz County the Luxury high end listing prices are down 24.29% and sale prices are up 2.9%.

On a daily basis I look at the MLS survey of our Silicon Valley Communities and see an over weighting of new listings to pending and sold properties..  We are now into the best season of home sales. The results going forward will be a good indication of where prices are going.  Listing are well outdistancing pending sales and sold properties to date.

Inflation has been taken over by the Ukrainian conflict with oil prices at a new high, taking along with it gasoline prices.  Foodstuff are dramatically increasing as Ukraine is a major wheat producer.  Future prices of wheat are at a new high taking with it corn and soybeans.  Those foodstuffs are what make meat prices go higher as the cost of feeding livestock increases.

The most difficult situation is interest rates and what affect raising interest rates will have upon inflation now after Ukraine.  From my observation the increase in commodities is a supply/demand situation instigated by fear and greed.  I cannot see how an increase in interest rates will affect the supply of wheat, corn and soybeans when a major world supplier is taken out of the supply equation.  Do not fail to realize that oil is a  major component in the production of foodstuffs.

Then to, I find it hard to believe that an issuance of a state ruling to expand property limitations to allow multiple family units will solve the housing issue.  As I see it, it is the cost of housing, not the supply, is the real issue.  Once the income factor is addressed the ability to buy homes is partially addressed.  Then the supply of houses can be a useful solution,

Just my opinion, not eXp's opinion.

Comments

Post a Comment

Silicon Valley Real Estate Newsletter

Covid Economy Falters Bay Area Luxury Home Sales Boom

While rents collapsed, rent went unpaid and landlords fought to keep above water an exodus evolved from the Bay Area; but within Silicon Valley, Luxury Homes escalated in numbers sold and in median prices. Quite an aberration.  In San Mateo County the number of Luxury Home Sales went from 564 in 2020 to 679.  In Santa Clara the number of Luxury Homes sold went from 1465 in 2020 to 1498 in 2021.   For 2021 Luxury Median Priced homes popped from $1.45 million to $2.90 million and Santa Clara from, $1.33 million to $2.66 million. (Thank you Louis Hansen of the Mercury News) The rush from San Francisco was  evident as Woodside, Portola Valley with their 1 acre minimum parcels provided space and safety.  *News Break states that East Palo Alto is among the Cities where home values are falling the most.  Between January 2020 to January 2021 the typical American Single Family home appreciated by 9.1%.  In East Palo Alto it declined 2.6% with a change in population, only to be beat by San Franc
Read more

the Problems are the Path: Notice of Default Opportunity in Multifamily Unit

  Startup bubble fueled by Fed’s cheap money policy finally burst in 2023 PUBLISHED THU, DEC 28 2023 9:00 AM  After years of record venture investments tied to low interest rates, cheap money has stopped flowing in startup land, leading to high-profile failures.WeWork and Bird declared bankruptcy in 2023, while pandemic plays like Hopin and Clubhouse faded into oblivion.“Prediction: 2024 is the year we finally bury the class of ’21 ZIRP ‘unicorns’ and start talking about a new crop of great companies,” Jeff Richards, a partner at venture firm GGV, wrote in a post on X. Easy Money created more risk than the inexperience entrepreneur.  The plan would to go back for more money when problems erupted.  Then came higher interest rates.  Failures, bankruptcies followed with empty offices and work from home.  Nothing new here! This year, it all unwound. With the Fed  lifting its benchmark rate  to the highest in 22 years and persistent inflation leading consumers to pull back and businesses to
Read more

The Problems are the Path: FED calls interests rates Wednesday January 31

On Wednesday the FED will tell what the tendency is for lowering interest rates.  If you readers just rely on CNBC, Bloomberg or some Social Media Site, I suggest you get on the St. Louis Federal Reserve Bank's mailing list.   Add to the Wall Street Journal and the U.S.  Census Department.  With those three sources you will not find yourself being jerked around by Media promotions and investment banks and advisors promoting their positions.   The Wall Street Journal had a list of the four new members of the Federal Reserve Voting Panel.  All four say too soon to cut rates.  The Federal Reserve so indicted the same.  The U.S.  Census reports showed slight declines in inflation with nothing near 2% annual rates.  The Census also stated POSITIVE growth in the US Economy.  All quite good for high interest rates.  It would appear to me why cut rates if the economy is doing so well?  The next issue the FED Governors must be looking at are housing prices and rents.  The Gen Z cannot affor
Read more