Real Estate Watch – Voak Homes
Predicting Our Summer Real Estate Market
Never make short-term predictions in real estate. You’re bound to look like a fool. With that said, here’s a short-term prediction: I believe the entry and first move-up markets ($500k to $900k in 92127) will see a bit of a slowdown from now through May (I am writing this in early April). I believe that in June we will see a lot of new buyers enter the market and push prices on the smaller homes up. I also think that that activity will spur additional sales in the $1.3M to $1.8M market as sellers of the sub-$1M homes are able to move up.
The driver for this is Qualcomm. In our area, there aren’t too many streets that do not have a Qualcomm employee living on them. People in the technical fields value education, and Poway Unified School District has the best education for the housing dollar in San Diego. Additionally, the master-planned communities of 4S Ranch and Del Sur provide clusters of similarly aged families and activities.
I know, the Broadcom takeover is dead, so why is Qualcomm important? As part of fending off the takeover attempt, Qualcomm committed to restructure and streamline (bad code words for “we’re going to lay off a lot of people”). We started to see the impact of this in late March when buyers working at Qualcomm cancelled several escrows in the area because they were told not to make a major purchase until the employment situation is clearer – the end of May.
Last time there was a potential layoff at Qualcomm, the market slowed and open house traffic fell until the layoff notices went out and people knew their job situation. We literally went from six to eight people through an open house to 40 in one week, and two thirds of families had an employee of Qualcomm. So, just based on history, I expect the next couple of months to be more reserved than normal (nice homes that are well-presented and marketed will still sell) and then activity to increase once we get to June.
To answer the follow-up question I know you have: no, I don’t think we will see a flood of homes coming on the market from those who are laid off. The severance packages are usually pretty good, and it will take them a while to determine if they are going to stay here or have to move for a new job.
Now, all I need is for the market to not make me look like a fool.
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