A chill is in the air as San Francisco heads into its always-slow winter sales season for real estate, with major tech layoffs now added to the long list of headwinds facing the residential market.
“Open houses this weekend were poorly attended all over the city and it feels like we are closing down for the holidays early this year,” Compass agent Nina Hatvany said via email. “We are definitely seeing the impact among our buyer clients as they worry about their job security (weighted against the specter of even higher interest rates as we go into the spring).”
Twitter laid off half of its 7,500-person staff beginning late last week, including nearly 800 in San Francisco and more than 100 in San Jose, according to mandatory notices the social media company filed with those cities. San Francisco-based Lyft laid off 13 percent of its employees, or about 700 workers, last week. And South San Francisco-based Stripe terminated the employment of more than 1,000 workers or 14 percent of its workforce.
Also, the tech industry is bracing for Meta layoffs, which the company formerly known as Facebook may begin this week.
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There could be a slight uptick in new homes hitting the market this winter from those who have been let go, Compass Chief Market Analyst Patrick Carlisle said via email. But “many or most of the workers will probably look for (and find) new jobs within the Bay Area, which is still the largest high-tech center in the world,” he said.
The job losses could have an outsized impact on the rental market and the condo market, Carlisle added, because many tech workers are younger renters or entry-level buyers.
The condo market, particularly downtown, has already slowed substantially this fall, after sales came back in 2021. During the three months ending Sept. 30, there were just under 900 resales, a nearly 35 percent decrease from the previous year, according to Polaris Pacific’s October market report. The median price decreased 4.9 percent from last year to $1.155 million in the same period.
Even those not directly impacted by the layoffs may be worried about their own job security, which could make them decide to hold off on buying a new home.
“If people fear being laid off, they will almost certainly put off new, huge financial purchases — and buying a home is typically the biggest financial transaction of most people’s lives,” Carlisle said.
Hatvany agreed that the mental shift brought on by the layoffs could have a bigger chilling effect on the market than the layoffs themselves.
“There are still people out there with plenty of money and companies are still hiring and some are growing, but the all-important psychology of the buyers is definitely being affected and that means properties that have more challenges will be even more challenged as we go into the winter months,” Hatvany said.
Carlisle predicted that the overall impact of the layoffs on the San Francisco market this winter would be relatively mild, given that November and December are typically the slowest sales months of the year anyway and the normally robust fall market has already been shocked into stillness by macroeconomic trends including higher interest rates, inflation and an erratic stock market. This October, the city saw the lowest sales volume in over a decade and the 11-county greater Bay Area had the lowest volume since 2007, according to Compass data.
“Right now, the impact is probably small going forward after all the adjustments that have already occurred, and the much larger impact of other economic factors,” Carlisle said.