Silicon Valley real estate market softens again

by Mary Pope-Handy | Nov 25, 2018 | Market reports, Market trends & statistics

It is not at all unusual for the housing market to go flat or even decline a little in the second half of the year. In October, the local Silicon Valley real estate market got an uptick as prices rose from the month before, homes sold a little faster, and basically things inched back into the seller’s favor. Sometimes homes that sell between Labor Day and Halloween seem to be in a second spring of sorts. In November so far, though, the Silicon Valley real estate market softens again – slightly. It’s all slightly more depressed than in October: prices are a little lower, days on market a little longer, etc. It is still a seller’s market, but not nearly to the degree it was in spring.

In other words, it’s a good time to buy (at least compared to 6 months ago).

Home buyers are funny, as a rule. They tend to buy when it’s a frenzy and prices are skyrocketing and multiple offers are in the crazy zone with buyers going in without any contingencies. Once the foot comes off the gas and they can buy with some rights to contingencies and can purchase closer to list price, many buyers freak out and won’t buy at all. It’s like the market has to be against them if they are at all interested.

Let’s look at the numbers for Santa Clara County. I pulled these tonight from MLS Listings and the data reflects single family homes in Santa Clara County. (Remember, closed sales were usually ratified about 30 days prior.)

First – inventory – I think it’s very important to not just view the month-over-month changes, but the year over year. How does it usually look for this month in the past? 2017 was a weird year, so going back a little further in time provides helpful perspective.

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Silicon Valley real estate market

by Mary Pope-Handy | Jun 8, 2018 | Market reports, Market trends & statistics

How is the Silicon Valley real estate market?  It’s more of the same this month, with too-low levels of available inventory of homes for sale in Silicon Valley.  At this point, the low inventory is a chronic problem for everyone. Inventory is up from the beginning of the year, but no where near “normal”, as you can see in the data below.

Home buyers in the county or on the Peninsula have little or nothing to purchase, and sellers feel trapped – they cannot sell their current home as there are bad odds that they would be able to purchase something else if they did sell. Unless they expect to leave the metro area, they are going to hold on tight in most cases.

Have a look at the inventory of houses on the market from 2001 (the earliest year I can pull from the MLS) to today in Santa Clara County – June is highlighted in a pale yellow to make it easy to find and compare the same month over the last 17 years.

The Silicon Valley real estate market – a look at inventory of available homes for sale:

The numbers really say it all. Even if you are new to the San Francisco Bay Area, you cannot help but notice the relative scarcity of homes for sale this month as opposed to last month or any other dating back to 2001. Therefore, it’s no surprise that solid homes here that are not in the luxury tier for their area (and are aggressively priced, beautifully staged, professionally photographed, and easy to view) are getting multiple offers, high overbids, and selling with no contingencies for inspection, loan, or appraisal. It’s more difficult, but not impossible, for anyone trying to purchase with less than 20% down in multiple offer situations. The key is to have extra money, beyond that 10%, for a potential appraisal deficit.

Here’s how the numbers look for various  Silicon Valley communities. You can see all the info for them at popehandy.rereport.com or view the PDF newsletter by clicking the link or the image below.

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