Housing & Tech Specs: What Brexit Could Mean For The Bay Area

The actualization of Brexit is still years away…yet that has not hindered immediate international speculation and a measurable impact to virtually every global monetary market. On a local level, Californians have questioned what Brexit means for the, especially with regards to housing and employment.

Image courtesy of Fortune

The immediate impact to real estate came at lighting speed, as the 10-year treasury plummeted and mortgage rates followed suit. In the short-term, homeowners may benefit from increased purchasing power while the cost to borrow hovers at historic lows. According to Fortune, Brexit also means the increase of home values; lower mortgage rates often equate to higher home prices – since the same income affords you a more expensive home, so thank your new neighbors for all that equity.

While rates may potentially face a hike by year end, the longer term impact of Brexit on housing is also positive. Many analysts are projecting an increased demand in US real estate among international investors. Those with a global gaze over urban hubs are going to start seeking an alternative to London in the post-Brexit era, likely cities such as New York city and Los Angeles. Fortune states that anyone living in a major US economic center can expect higher prices in both the residential and commercial real estate sectors.

It would be hard to separate the impact of Brexit on housing without touching on the potential outcomes to employment. Bay Area firms such as Apple, Facebook and Amazon have large offices in Britain, and younger UK tech companies have also benefitted from fluid immigration policies among the EU. That could change post-Brexit, and rumors are already abound that Ireland, as the sole remaining English-speaking capital in the EU, could profit considerably. Dublin’s Silicon Docks already hosts the European headquarters of Twitter, Airbnb and Slack, to name a few notable tech giants. (Having the lowest corporate tax in Europe doesn’t hurt Dublin either.) The SF Gate reports that ‘Apple employs about 5,500 people in Ireland, Google about 6,000, Microsoft about 2,000 and Dell about 2,500’.

Image courtesy of the Bay Area Economic Institute

While Bay Area tech companies are likely to see some long-term fluctuations in their European divisions, what does that mean for us here in California? NBC Bay Area political analyst Larry Gerston reported that our economic impact expands beyond the ramifications of some tech transitions overseas. According to data from 2014, California exports to the UK add up to about $5 billion annually, and that over 1,000 UK businesses employ 55,000 workers in our state. We also earned $900 million in tourism from Britain in 2014. Could that equate to local job loss in the years to come, and reduced earnings among US businesses who rely on tourism? It’s possible, but only 3% of American earnings come from the UK, making it less concerning on this side of the pond.

At the end of the day…what does all of this mean for homeowners? Essentially, it appears that opportunity is knocking a little bit longer while rates remain low, and reinforces that rising values are not only here to stay, but will continue to grow. That makes now a great time to buy; maximize purchasing power and move-up while you can. Assess your real estate investments and consider the future potential of property investments within your portfolio. From an employment stance, tech workers may see some transitions within their international framework. If any local job loss occurs on account of Brexit, sources appear more likely to be from British-based corporations than US tech response.

The one word that plagues Brexit today and housing always is: uncertainty. While we see some early indicators of what may be, there is no crystal ball for tomorrow or ten years from now. Even the most reliable and accurate sources cannot gleam from Brexit what is best for you, so the recommended course of action is to weigh the options you have today and the lifestyle you’d like to have tomorrow – and see if you can make a step in the right direction. If that means a property valuation or assisting with your current buying and selling needs – Homes of Silicon Valley would be honored to help.

Warm regards,

Mark & Jason

team@homesofsv.com

Sources Used:

Fortune: Brexit Could Make Your House Worth More

SF Gate: Brexit just made Ireland look even more attractive for tech

Bay Area Economic Institute: How will ‘Brexit’ Impact the Bay Area?

NBC Bay Area: Examining Brexit’s Impact On California

People: What's Brexit, Anyway? All About the U.K.'s Vote to Leave the European Union – And Why It Matters to Americans