Silicon Valley Real Estate Market May 2025 Tariff and Its Impact on the Real Estate Market After the tariff-caused financial-market plunge in the first week of April offer-acceptance activity typically significantly declined (when activity usually increases moving deepr into spring). Uncertainty causes people to pause and not make any major changes in life, including real estate. After that, regions had varying ups and downs as consumers tried to make sense of the volatility – and stock markets saw varying ups and downs – but all regional markets saw some scale of rebound from April lows in May through the week ending 5-17-25 after the new tariff agreement with China was agreed to and the subsequent enormous jump in stock markets. [COMPASS Market Research] It’s expected that the growth this year will be slower. There will be volatility, yet things may stabilize and we may see new highs in the U.S. equity market in 12 months. Recession is not expected. There may be 2 rate cuts by Fed by end of the year. Cost Segregation Cost segregation and bonus depreciation are two tax strategies that can benefit real estate investors by accelerating depreciation deductions and increasing cash flow. Cost Segregation is a study that identifies and reclassifies certain building components as personal property or land improvements, which have shorter depreciation periods (typically 5, 7, or 15 years) than the building structure itself (27.5 years for residential, 39 years for commercial). resulting in larger deductions in the early years of ownership. Bonus Depreciation Bonus Depreciation is a tax incentive that allows businesses to deduct a large percentage of the cost of qualified assets in the year they are placed in service, rather than spreading deductions over several years. allowing for a significant upfront deduction. Combining Cost Segregation and Bonus Depreciation Cost segregation identifies assets eligible for shorter depreciation periods, and bonus depreciation allows for a large upfront deduction on those assets, maximizing tax savings. Example: A cost segregation study identifies $100,000 in personal property eligible for a 5-year depreciation life. With 60% bonus depreciation (for 2024), you could deduct $60,000 in the first year, plus regular depreciation on the remaining $40,000. Important Notes: It’s recommended to consult with a tax professional to determine the best strategies for your specific situation and to ensure proper implementation of cost segregation and bonus depreciation. The following is a chart of Financial Markets from 2024 till week of 5/20/2025. Also stats for the last 24 months in Santa Clara and San Mateo counties. (other areas available upon requests) Anywhere in the country if you need a trusted advisor in Real Estate, Real Estate Law, Estate Planning, Financial Planning, CPAs, etc. please feel free to reach out.

Santa Clara County

last 24 months

San Mateo County

last 24 months

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