The streaking hot San Francisco housing market is finally showing signs of cooling down and experts are wary of trouble times ahead.
Morgan Stanley's Vance Edelson issued a statement aimed at its valued clients on Friday saying, "The tech IPO slowdown has stoked concern that San Fran, one of the hottest real estate markets, could be ready for a pause."
According to Business Insider, Edelson's team of analysts has specified commercial real estate as area of concern which has shown tremendous growth; commercial property rental rates has increased by 70 percent from the 2009 crash and market demand for such properties has been on an upward trend. Only 6.5 percent of office spaces available in the city are available for rent which is the lowest it has been in 10 years. The economy has indeed fought back from its fall and has managed to come back strong.
However, the Morgan Stanley analysts' report also indicated that the strong demand for commercial property is now slowing down due to sub-leasing and a slowdown in IPOs of tech companies. The lack of new IPOs mean there is lesser number of tech companies looking to move in San Francisco which greatly affects the rate of rentals in the area.
Meanwhile, in a report by Curbed, a company that tracks condo prices, The Mark Company, has revealed that the latest published rates has dipped by 3 percent in the months of August and September. Resale of condominium units also dropped by 2 percent with rates dropping to $953 per square foot and new ones currently priced at $1,294 per square foot. Real estate website Redfin CEO Glenn Kelman said that he has seen many homes getting few offers which he thinks is tied up to the stock market slowdown. Single family home rates remained steady in September while there has been a 10 percent drop in the prices of condos.
