Real estate experts will be watching the Bay Area housing market closing in 2020, the start of a new decade.

Real estate experts will be watching the Bay Area housing market closing in 2020, the start of a new decade.

Photo: Justin Sullivan/Getty Images
Photo: Justin Sullivan/Getty Images

Real estate experts will be watching the Bay Area housing market closing in 2020, the start of a new decade.

Real estate experts will be watching the Bay Area housing market closing in 2020, the start of a new decade.

Photo: Justin Sullivan/Getty Images
Will the housing market crash in 2020? We asked real estate experts to look ahead

The Bay Area just said goodbye to a decade when land prices soared to astronomical heights. The 2010s were marked by $1 million fixer-uppers and bidding wars, and many homeowners saw their property values double. In 2019, prices flattened out a bit compared to 2018.

At the beginning of a replacement decade, what is going to 2020 bring? Is a crash on the horizon? What impact with the U.S. presidential election have?

SFGATE reached out to four experts to weigh in on the outlook for the Bay Area real estate market in 2020. We've compiled their responses to several questions below.

Boom or bust: What will happen to the housing market in 2020?
Ken Rosen, chairman of the Fisher Center for land and concrete Economics at UC Berkeley: "First of all, the speed of price increases flattened out for home prices in 2019 ... We expect that to continue in 2020. We have low interest rates, but we also have the fact that housing is very expensive so it’s hard to become a bullish market. We expect the affordability problem to continue for the Bay Area. Job growth may slow and there's the possibility of a recession. A lot of people are going to decide now is a good time to sell because the market has gone up a lot in the past and prices are high."

Herman Chan, Sotheby's real estate agent working in the East Bay: "Bay Area real estate in 2020 will not face a crash. Unlike the great financial crisis where people bought with zero down payment, too many people have large down payments in their home or paid all cash in the past 10 years. They aren’t going to just walk away. Rents are still among the highest in nation and the appreciation ramped up steadily in the past 10 years, so many home owners have options. They will wait it out, rent it out or cash out. However, for home buyers the ramp up has made the acquisition price a barrier to entry. The market will probably be flat overall. So it is not a crash, nor is it a boom."

Patrick Carlisle, chief market analyst at Compass Bay Area: "My guess is that the market will stay relatively even, neither increasing nor dropping by very much. Most of the Bay Area counties in 2019 saw median prices about the same as in 2018 (SF, San Mateo), dropped a little (Marin, Sonoma, Southern Alameda County, Santa Clara County), or bumped up a little (the Oakland-Berkeley, Inner East Bay region). That will probably occur in 2020, as well.

"I don't see a crash as likely, unless caused by some big, sudden, macro-economic, national or international event, which might be anything from war with Iran, to a Chinese stock market crash, or huge oil supply issues, run on the markets, or some new financially engineered, Wall-Street product that no one understands blows up. And the fact that personal, corporate, U.S. government and international debt are all at all-time highs and climbing is of significant concern. The only local event that could cause a big, negative adjustment would probably be an environmental/ecological event - such as an earthquake, massive fires with huge and continuing power outages."

Pierre Buljan, real estate agent on the Peninsula for more than 40 years and currently with Compass: "In my humble opinion, I don’t see any market crash in the near future. Two reasons, the market has already been leveling off over the past year, all over the greater Bay Area. Second reason, I don’t see much of a political climate change this coming year either. Prices are not expected to rise but rather stay neutral this year (if there is such a thing?). Lots of new construction is in process, which will help stabilize prices and give buyers an edge, so to speak. People will remain cautious as it is an election year and more on guard with fewer new construction projects started this year than in recent past."

ALSO: The most expensive homes sold in San Francisco in 2019

What factors will impact the Bay Area market in 2020?
Rosen: "Federal tax reform. Tax incentives are less desirable to homeowners. Federal tax reform limits state and local income tax deduction to $10,000, so raises the effective tax rate and after-tax costs of housing substantially in California and other high tax states. The doubling of the standard deduction and reduction in mortgage interest deductibility also reduces the incentives for homeownership. The after-tax cost of owning a home has gone up."

Chan: "Iran. Election. China. There was a reckoning with the IPOs buzz that fizzled. Frenzy is gone. There is a normalization in the market, which overall I find healthy. And of course lack of housing/affordability is always a factor."

Carlisle: "Outward migration of residents and businesses, foreign immigration, employment, interest rates, stock markets, risk capital ."

Buljan: "The election. If any major changes are to happen, it will be after the elections. [But] the more likely factor that could gravely affect the real estate market is the recent California political talks about repealing Prop 13 and effectively raising the property tax prices three-fold!