There have been quite a few corporate layoff announcements in recent months, some noisy and some a little quieter.
Yahoo: 15% of its workforce
GoPro San Mateo: 150
Sears San Mateo: 110
Addeco Recruiters Palo Alto:108
Symantec Mountain View: 44
Abbott Vascular RWC: 114
Sony San Mateo: 80
Hewlett-Packard Palo Alto: 65
Western Digital Mountain View: 56
Acclerant Medical Devices Menlo Park: 114
How does this relate to real estate?
Many industry pundits are pointing to this as one of the reasons that property values may be finally leveling off.
Combined with the fact that the Fed will raise interest rates as much as a full point this year, and most agree that a slowdown to the crazy appreciations that we’ve seen in property values could be imminent.
So what does an interest rate increase mean to buyers and sellers? On a $750,000 purchase, a one percent increase from 4.50% to 5.50% means that buying power gets reduced to $675,000 if the monthly payment remains the same.
Extrapolate that out to a more Bay Area-centric $1,500,000 property and the buying power gets reduced to $1,350,000 with the same monthly payment. As a homeowner, do you think that rising interest rates and more high-tech layoffs will affect what you can sell your property for going forward?
Price reductions, longer days on market and reduced number of offers have been recent trends. This doesn’t mean that we’re in for a real estate implosion. It does mean is that homeowners waiting to sell at the peak of the market may be looking at that very peak, today. Think about it… if today is the peak environment, what’s next?