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Is the decision on Fiscal Cliff going to drive the housing market in Bay Area down ?


The Key Indicators (Sales, Manufacturing and Consumer Spending) are either going south or are completely stalled. The only silver lining is the Job Growth (but that factor is very volatile). Also Prices in some areas have inflated more that 20% y-o-y. Is this a pattern of a bubble growth ? I am interested in buying a home in Dublin CA area but the possibility of another slow (recessive) economy is holding me back.

  • December 03 2012 - Dublin
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Answers (1)

Profile picture for Ana Ma
Although the uncertainty of a fiscal cliff is scary, the reality is, we probably won't see any major changes for a while. Congress is more likely to launch an extensive examination of proposed line item cuts and reforms than to make any drastic changes to an already fragile economy.
 
For those who don't know what the fiscal cliff is all about – Congress is in the middle of negotiating tax increases and spending cuts.  Some of the proposed line items include:  
 
1.    Increasing the payroll tax from 4 % to 6.2%
2.    Ending emergency unemployment benefits
3.    Cutting medical reimbursement rates, and
4.    Trimming back mortgage-interest deductions
 
With taxes potentially rising in 2013 and spending on the way down it's possible we could fall back into a recession - but to what extent is uncertain.  If we do fall back into a recession, it's save to say the Bay Area will not be hit hardest by the recession, judging by 2008 recession stats.  As we all know, some areas of the country were hit harder than others (I.e Las Vegas), but not the Bay Area.  
 
The Bay Area is still one of the most desirable places to live, and one of the hottest markets for investors.  In the last quarter of 2011, for example, 38% of all venture capital money was invested here in the Bay Area.  The Bay Area also has an abundance of tech jobs fueling the local economy. Home prices in Silicon Valley, San Francisco, the Peninsula and even parts of the East Bay are experiencing faster appreciation rates than in the rest of the country, and I don't see that changing anytime soon.
 
Bottom line, I wouldn't worry about home prices going down anytime soon – at least, not in the Bay Area –we've pretty much bottomed out, so if you're looking to buy now might be the time.
  • December 19 2012
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