When a number of San Francisco-based tech companies go public soon, as they are planning, what will happen for the area’s real estate market? Also, with these new IPOs, what should home buyers and sellers be aware of? In fact, talk of a liquid cash influx has many of the mindset that the IPO firms will cause sudden and robust demand for pricey homes. As a result, should buyers and sellers feel caught up in a rush? They might want to get ahead of the curve. Although, no rush decisions in the IPO rush should be the focus, instead.
Make No Rush Decisions In the IPO Rush
It’s true, Uber, Lyft, Airbnb, Pinterest and some others are all planning to go public in 2019. Also, their valuations rank among the 10 largest IPOs, since 2012. In fact, their company employees, who have stock stand to get a storehouse of new wealth. As a result, they will likely direct some of that into real estate, readily. At the same time, home buyers and sellers in the area need not let all the IPO fervor take hold. And, they should make no rush decisions in the IPO rush.
Even as these IPOs become reality this year, keep some things in mind. First, IPO wealth conversion does not take place just like that. The process has a controlled delivery. In fact, much of the wealth is in structures, such as stock options and restricted stock units that are convertible, over time. Also, there are lockup periods. These ensure employees won’t unload their stock, too soon after the IPO.
Second, these firms may or may not maintain market value and success, indefinitely. Keep in mind they are known in the industry as disruptors. Their up-and-coming profiles make waves on Wall Street. Although, profits make the “Wall Street go ’round.” Bottom line, such firms must be profitable, for their stock prices to stay high.
Third, there’s no getting around the laws of supply and demand. What happens if the supply of homes and condos is constrained? Well, San Francisco real estate prices will continue to go up.
Home Buyer and Seller Takeaways
Here’s my advice to Buyers. If you’re ready, and you find a home that you can afford now, buy it. Point in fact: The property is likely to appreciate in the next few years.
My advice to Sellers is more nuanced. If you’re ready to sell, but could wait awhile, then study the current competition (or lack of competition) in your neighborhood/property type. Also, consider where you are moving and the market outlook in your new target neighborhood. It is also true that prices go up in the Spring. As a result, it may make sense to wait, in some situations.
Call me at +1650-743-4320, or email me to discuss your specific needs and wants in Real Estate. Meanwhile, I hope you’re enjoying the local Spring weather now!