Bay Area Spring Housing Market Slows Amid Tariff Uncertainty

A federal court recently put a block on President Donald Trump’s tariff plan, but residential agents say that uncertainty around the tariffs, and the subsequent roiling of the financial markets has already had its impact, spooking some segments of the buyer pool during the usually hot spring sales season.

“We were all saying, ‘We’re back, baby!’ and then the tariffs happened and I think that certainly dampened some of that sentiment,” said Arrian Binnings, a Christie’s Sereno agent in San Francisco and Marin.

In January, the West Coast condo market was “as hot as can be,” said Polaris Pacific’s founder, Paul Zeger. With rumors of the tariffs on the horizon, by February there was a “distinct change” where sales began to dramatically decline. New pending deals in February and March were 50 percent of what they were the year before across the marketing and sales firm’s entire portfolio of 20 projects in several Western states. A recovery started somewhat in May, with tours and loan applications both up and “liquid” buyers taking advantage of developers’ priced-to-sell mentality, he said.

But there is still a tariff-connected cloud hanging over the market.

“Many homebuyers are still slow to purchase due to the daily uncertainty that the tariff debacle is creating in the financial markets,” he said.

Seattle, Arizona and Hawaii condominium sales have been steadier than the Bay Area because people in those markets aren’t as reliant on stock sales to purchase their home, he said. Initial Public Offering activity is also “on ice” while the market see-saws, which is also holding some buyers back from cashing out their equity, he added.

In addition to the luxury market, the elimination of staffing at Fannie Mae and volatility of interest rates is also impacting entry-level buyers, Zeger said, since loan approvals are taking longer and people’s interest rates could go up while they are waiting.

“If all of a sudden your loan goes from 6 percent to 6.5 percent, some people can fall out of qualifying at that point,” he said. “I think the entry level is being hit for the ability to purchase and the luxury buyers are being hit just because they don’t need to purchase, so they don’t.”

A “competing force”

While there’s some slowing impact from the tariffs, there’s also a “competing force” that kept the market moving this spring and that is the pent up demand from the last two low-volume years, Binnings said. The Five Ds — “death, divorce, debt, diapers and diamonds” — is acting as a “forcing function” and is “actually overpowering the wet blanket that was thrown on buyer sentiment.”

Gino Canori, president of Related California, said that condo sales at The Avery have been moving forward without any discernable impacts from the tariff uncertainty throughout the spring, and the luxury apartment segment of the East Cut project is filling up as well. He added that he was okay with some short-term volatility, as long as the economic gains that the tariffs are meant to create come through for the country and its urban cores over the long term.

“I don’t know if this plan is going to work or not,” he told The Real Deal at an event last month dedicated to the city’s recovery. “We’ll have to see.”

Continued low inventory is also making some buyers move ahead, hoping for less competition if they bid during the turmoil, said Christie’s Sereno agent Nicholas French, who primarily works in Silicon Valley. Plus, some buyers cashed out “in the nick of time,” he said, putting them in a great position to bid without keeping one eye on the Nasdaq.

Even before the tariff and market uncertainties, the later spring season is already a time when the “euphoria of the early season starts waning.” The impacts on pricing could have been much worse if they came earlier in the competitive season, he added.

“We might see a little bit of a blip, but in the big scheme of things, this is not a critical moment in our market’s time,” he said.

During the stock market’s downward spiral he reminded tech clients “freaking out” over their portfolios’ values that they’re still up considerably over the long term. One recent client who works at Apple was calmed when he reminded her that, even with the recent dip, her stock was still up 200 percent over the last five years.

With the stock market in a better place today than it was even a month ago, there has been an uptick in interest, said Compass agent Nina Hatvany, who works primarily in San Francisco. In April she heard buyers at open houses fretting over the crisis in the financial markets, but now the local luxury market seems “to have recovered a bit after the tariffs and the stock market gyrations,” she said, citing one of her recent San Francisco listings that went for $8 million “really quickly and over asking.”

“But it’s spotty,” she added. “There are houses lingering that one would have thought would have sold by now and then others being snapped up.”

Being remodeled and turnkey helps, she said, especially given the likely impact of tariffs, assuming they do go through, on construction costs.

Of course, on the highest end, buyers don’t need to sell stocks at all, said Nathalie de Saint Andrieu of Christie’s Sereno, who repped the buyers in a $32.1 million Atherton buy in April.

“Once you start going over the $20 million mark, there’s enough cash sitting somewhere,” she said.