Wall Street hits Main Street
As the calendar turned over from 2024 to 2025, there was hope. A Cushman & Wakefield report on Bay Area multifamily housing in the final quarter of 2024 announced that the “outlook brightens,” noting a slowdown of tech layoffs, and continued healthy venture capital investments in the area.
Today, the mood is more like cautious optimism, as economists and real estate professionals digest a couple very rocky weeks of the stock market, which saw the Dow shed a couple thousand points and the S&P 500 enter correction territory. This has been driven by the on-again off-again tariff wars being waged by the White House and stubborn inflation.
A short-term blip in the stock market isn’t going to have a widespread impact on the real estate market, though it might affect an individual buyer’s ability to afford a desired property. But continued ups-and-downs in the market not only affect many individual buyers’ ability to afford homes, it creates uncertainty among many people about the stability and health of their investment portfolios. That, of course, means they’re more cautious about big purchases.
Ruth Krishnan of the Krishnan Team wrote in her latest market update that “[t]he stock market has declined by about 5–6% over the past two weeks. Keep in mind, though, it had risen significantly over the last two years. If this downturn is short-lived, the impact should be minimal.” She added: “Encouragingly, we saw a slight recovery on Friday, so let’s stay optimistic.”
Compass’s March 2025 market report notes that “consumer confidence in February dropped across all age, income and wealth groups as expectations for personal finances and both short-term and long-term economic conditions all declined,” and that was before the March carnage on Wall Street.
‘This year has already seen some of the most destructive wildfires in California history, and we’re only in March.’
— Gov. Gavin Newsom
“Stock markets have corrected as investors attempt to adjust expectations for the shift in tariff policy,” according to Danielle Hale, Realtor.com’s chief economist, in a mid-March market update. She says this pushed some investors to seek the safety of bonds and has “driven 10-year yields down from 4.5% one month ago to 4.3% or lower. This shift had propelled mortgage rates lower for seven weeks, but that streak was broken this week as mortgage rates inched up.
“Nonetheless, the market mortgage rate trailed its year ago pace for a 4th week, timing that could make for a better spring buying season this year,” said Hale. “While mortgage rates began easing in mid-January, they remained high through much of February and this weighed down home purchase sentiment alongside rising worries about respondents’ personal financial situations.” She said the optimistic take is that the number of buyers who say this is a good time to buy a house was the highest in more than a year; the number of those saying it’s time to sell was the lowest in more than a year.
Krishna says, “My current take is that we might be in for a bumpier ride over the next 12 months than I’d initially hoped,” though she says the local buyers she’s speaking with “remain highly motivated.”
Emergency
In the wake of the horrific Los Angeles wildfires, earlier this month California Gov. Gavin Newsom issued a proclamation of a state of emergency to speed up forest management projects to protect communities in the case of wildfires. Stating, “This year has already seen some of the most destructive wildfires in California history, and we’re only in March,” Newsom ordered the removal of vegetation that could feed wildfires and the creation of “fuel breaks” and other areas that should slow wildfires and give communities time to fight back.
The proclamation suspends certain environmental regulations, including CEQA and the Coastal Act, as needed to complete the projects. It also broadens the state’s ability to reduce the available burnable “fuel” for wildfires by letting outside entities contribute to the work. California is “investing $2.5 billion to ramp up and implement the . . . Wildfire and Forest Resilience Action Plan,” reports the governor’s office.
Headline of the week
“Home Listings in Washington, DC, Surge Amid Elon Musk’s DOGE Purge” (Realtor.com)
Go figure
290 percent: the median appreciation in house sales prices in San Francisco since 1999, before the peak of the dotcom bubble (Compass Real Estate) . . . 2,700 square feet: the median size of homes built in San Francisco between 2000 and 2004; the median size of homes built before 1920 was 1,981 square feet (Compass) . . . 2.1 percent: increase in San Francisco home prices in February 2025 compared to the prior year (Redfin) . . . $1,272,219: average San Francisco home value (Zillow) . . . 49 percent: home sales in San Francisco above the listing price (Zillow) . . . 2,309: number of homes sold in San Francisco from March 2024 to March 2025 (Sotheby’s Realty) . . . $32 million: price for a four bedroom, six and one-half bathroom, 10,180 square foot single-family home on Broadway Street in San Francisco; it includes the dishwasher and wine refrigerator, but not the washing machine and dryer (Realtor.com).
Say what?
“With almost every municipality under a state mandate to [build] significantly more housing over the next few years, it is disconcerting to note that units under construction across the Bay Area have fallen to the lowest level since the first quarter of 2013. Much more work will have to be done to turn this number around.”
— Robert Sammons, senior research director, Cushman & Wakefield “Marketbeat SF Bay Area”
