The Silicon Valley market recently seemed to be on the skids from late spring through summer. The question was whether the decline in average and median sales prices was “seasonally normal” or if it was the beginning of a correction. Depending on which way you look at the data (or which data you used), you might come up with a different conclusion. What I did not expect at this point was an uptick in the market.
Today I did a quick study of pricing in Santa Clara County and San Mateo County. To my surprise, it appears that the closed sale prices so far in October are noticeably higher than in August – perhaps the sliding prices are sliding no more? Do we have an uptick in the market? We’ll have to watch and see. There are obviously very few sales so early in the month, but no matter which angle I tried, I did keep getting the same result: higher median and average sale prices in Santa Clara County and San Mateo County for single family homes. It was also strong for the condo / townhome market in Santa Clara County, but there’s a little dip for San Mateo County so far this month.
Here are some charts that I created from MLSListings, using the stats tools, today.
First, Santa Clara County single family homes, average sale price and median sale price. The uptick in sale prices is clear.
Next, the same criteria, but for San Mateo County, which also shows rising average and median sale prices :
What about the condo and townhouse market? Here’s the same criteria but for condominiums and townhomes in Santa Clara County. Once again, the numbers are up – rather than deepening the trend of downward pricing pressure.
San Mateo Condo and Townhouse market:
What’s going on with the Silicon Valley real estate market? Is it as crazy as ever with multiple offers, overbids, and few or no contingencies?
Things are much calmer now then they were earlier in 2018 or in 2017 (which was insanely “hot” all year). Many homes are still selling with multiple offers, but fewer of them. Some properties are selling with some or all contingencies.
And as before, comparing the three counties (San Mateo, Santa Clara, and Santa Cruz), San Mateo is the most expensive and overall it becomes less expensive in Santa Clara County, then less expensive still in Santa Cruz County. Alameda County has a little of Silicon Valley, but that area is in a totally different MLS system so is not part of this analysis.
What does it cost to buy a house in Silicon Valley?
In Santa Clara County (home to Palo Alto, Cupertino, Sunnyvale, Mountain View, San Jose, and my own Los Gatos), the average sale price is about $1,510,000 and the median sale price has been bouncing around in the $1.25 to 1.4 million range for the last few months.
Santa Clara County
Please click to enlarge:
For condominiums and townhouses, of course, it is a bit better.
In San Mateo County (home to Redwood Shores, Foster City, Menlo Park, San Mateo), the average sale price is about $1.815 million for houses recently sold. The median is a little lower at $1.5 million.
San Mateo County
And the San Mateo County Condo / Townhouse real estate statistics:
In Santa Cruz County (Santa Cruz, Scotts Valley, Aptos, Capitola, Soquel), it’s more affordable. The average sale price of houses recently has been in the high 900s, just under $1 mil, and the median sale price has been right about $915,000.
Santa Cruz County
And for the townhome and condominium housing market in Santa Cruz County:
And the Santa Cruz County resale condominium and townhouse market:
How is the year over year appreciation in these different parts of Silicon Valley?
The market varies, but the easiest way to get a quick sense of the overall market appreciation is to look at the charts above, on the right side of each, and view the green vs the red segments under the median and average % change. If the market continues cooling, with higher inventory and lower numbers of sales, you’ll begin seeing more red and less green as the year over year numbers go negative.
Right now, all 3 of these counties are UP over last year generally for both single family homes and condos / townhouses. Some cities and towns (and areas within them, not displayed here) are not faring as well, however. There are too many to list and they are easy enough to find, but they exist in all three counties. Overall, it seems that most areas are up about 10% from this time last year.
Naturally, it’s easier to buy near Santa Cruz than in San Jose, but the demand tends to remain stronger in the areas with the jobs as opposed to the coastal communities, so appreciation is usually stronger in the areas where it’s hardest to purchase. That seems to be true in a very similar way in San Mateo County, too – yes, it’s less costly to buy in Half Moon Bay, and in an up market it’s great, but in a down market it will not fare as well as Belmont, San Mateo etc.
Within all of these market areas, there are hotter and cooler locations, school districts, price points, etc. Often there are work arounds to maximize the sale or purchase of a property. For instance, some homes have a pool that eats up the whole yard. That might make a home difficult to sell, so perhaps you can buy it without competing against so many offers – and then remove the pool later. Often the “fixes” are not as costly as you may think.
Want to buy or sell in Silicon Valley? Please reach out to me. I’d love to chat with you about it and see if we might work together.
Whether you’re a long-term renter, temporary renter looking for a furnished rental, or a landlord, you’re probably wondering how the Silicon Valley’s apartment rental market is today and where it’s heading. Most real estate agents in this area do not deal with rentals, so rental housing is not typically something we track super closely. That being said, the same things that affect the residential resale market frequently effect the apartment rental market as well. So, without the help from my usual sources, such as the MLS (Multiple Listing Services), let’s look at what people are saying about the current trends.
Silicon Valley’s cooling apartment rental market
There are a few good sources for rental home information. One of them is RentCafe, which provides info on many cities and towns in Santa Clara County. The RentCafe page on Mountain View, for instance, provided the average apartment rental for all apartments, for studios, 1 bedrooms, 2 bedrooms, and 3 bedrooms. The overall averages seem to be somewhere between the 1 and 2 bedroom price points. It also shared today’s softened prices relative to last year’s. (I find this curious since buying a home is now more expensive than a year ago.)
RentCafe has similar info for a few cities nearby. You can find Santa Clara here, but change the last part of the URL to get a different city:
Another excellent source of information is Apartment List.
Apartment List does not analyze every city and town, nor do they study the difference between neighborhoods, such as comparing South San Jose with Willow Glen, but where they do give insight helps to show the major trends happening around the bay area. Check out Apartment List for more detailed analysis, and the most up-to-date information on the market. Also check out their Rentonomics page with more articles on renting.
Is there a solution to the lack of low-cost apartment rentals?
Analysts all believe there will be some market turnaround in the not too far future, but there are a few answers to where it may come from. CNBC published an article on the housing shortage dealing with high tech companies. Large industry leaders such as Google, Facebook, and Twitter continue to hire, bringing people into the area more quickly than developers are building, and forcing up the prices in both housing and rental markets. Employees have asked these companies to help, and some are responding. Google and Facebook have both come up with plans to construct affordable housing.
For years, California law has stated that a certain amount of affordable housing must be available in each community. Unfortunately, many communities are ignoring both the law and the need for such developments. If every community were to develop what the law required, the market would be much more balanced. Yet again, it’s the investors that are controlling the development, and it will not likely happen soon.
Below, please find a simple chart which provides a pretty good sense of what homes actually cost – not what they are listed for, but where they sell, here in the Valley of Heart’s Delight.
Often when people relocate to the San Jose area, they are interested in communities with good schools, like Cupertino, Saratoga, Los Altos, and Los Gatos. It can be a real shock to the system to find out that buying power isn’t what was hoped.
This data is courtesy of Sereno Group – thought it would be helpful to folks relocating here as a snapshot on the Silicon Valley real estate market Disclaimer: in many of these cities, there are different school districts within a city’s borders, and they are their own “markets”. Consider this as general information only.
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.
How about the various parts of the county? The Silicon Valley real estate market varies from one area, price point, and school district to the next. The hottest of the hot markets are in the heart of the tech centers in prices under $2 million.
Sunnyvale has the highest sale price to list price average, with a staggering 116.1%, and Santa Clara is just behind at 113.9%. Only Monte Sereno is coming in at under 100% for the sale price to list price ratio (it is a very high end community). There are no “soft” markets in the bottom 50% of pricing anywhere.
Note that it’s very similar to the South Bay in that most communities have average sale price to list price ratios of over 100%, and the super high end areas like Woodside, Portola Valley, and Hillsborough are seeing milder SP to LP ratios than the more moderately priced cities such as Daly City (120.6%), San Bruno (117.7%), or Belmont (116.2%). These areas are not, generally speaking, luxury markets – so there is much more competition.
As is the normal pattern, San Mateo County is the most expensive of these three, followed by Santa Clara County, and then Santa Cruz County. Living by the coast is a dream for many, and with slightly softer prices and competition, this can be a fantastic retirement option for Silicon Valley homeowners looking to downsize.
In Santa Cruz County, like SMC and SCC, affordability is fueling the hottest market activity. Boulder Creek, known for its abundance of redwoods and rainfall, gleaned the most intense overbids in that county at 104.9% sale price to list price ratio and an average sale price of $570,000 – an absolute bargain relative to nearby areas “over the hill”.
Got a luxury budget? You are in luck!
Home buyers looking to purchase over $3 million (at least in most areas) will find it a good market for them to purchase. Selling under $2 or $2.5 million – again, in most areas – is fantastic for most properties. Who’s got it made? The move up luxury home buyer!
To get more details on the real estate market in Santa Clara County , San Mateo County, or Santa Cruz County, please visit http://popehandy.
One of the tools I use in my Silicon Valley real estate practice is Altos Research. My subscription, which generates reports on mls data of homes for sale weekly, covers all the zip codes of Santa Clara County. The market reports by zip code can be a real wealth of information for home buyers trying to figure out how much home they can get for their money as the report breaks down each zip code area listings by price quartiles and provides the average home and lot size, among other items, in each bracket.
Here’s one part of this week’s report for single family homes in 95032
This is a really helpful way to grasp qucikly how much it will likely cost to get you into a certain sized home. It also provides a sense whether your particular price point is near the bottom or top of the market – or if it’s possible at all. Want to buy a home here but the budget is $1 million or less? The data above reveals that this is unlikely in a house. But perhaps a condo or townhouse might work.
Next, please notice the days on market by pricing tier. It’s a lot hotter of a market in the lowest priced houses than it is in the highest.
It also helps home sellers to understand what part of their local market is hot or cold (if any).
There are many other elements included in the report. The main summary of “how’s the market?” is found in the upper right corner. Below is the example from the same Los Gatos 95032 report cited above:
The Altos data is strictly by town or zip code, so school districts won’t be covered – and here they are a major driver on home values. Even so, this is a great starting point and a way to get the big picture painlessly.
Please sign up and get the monthly newsletter, too!
The report is free to you – please sign up below to get the market reports by zip code emailed to you automatically each week. Yo
But wait, there’s MORE! Two monthly newsletter options, too!!
I also offer a couple of monthly newsletter than you can sign up to receive. The Silicon Valley RE Report comes out between the 5th and 10th of each month, and that site automatically generates an update for particular addresses or areas, depending on what someone signs up for. If interested, go to http://popehandy.rereport.com/market_reports and navigate to the report you want (by city, the county, or part of San Jose, for instance) and sign up to receive updates by clicking on the “Subscribe to report” button.
Additionally, once a month I send out a personalized newsletter via Mail Chimp that includes some data from the RE Report as well as other information, such as stats I’ve pulled directly from the MLS or what I’m hearing about market conditions at office meetings, or changes to the purchase contract or disclosure paperwork, etc. You can see a sample with my May 5, 2018 newsletter and also view the past mailings (upper left side “Past Issues”) & sign up if you like to get these each month. The sign up button is on the upper left side and simply says “subscribe”. There will be a little overlap with the RE Report, but it will provide info that isn’t available on that site.
It can be really challenging for people moving to Silicon Valley to get a sense of pricing for home buying. So to compare “apples to apples,” let’s take a hypothetical case of a 4 bedroom, 2 bath home of approximately 2,000 SF house (appx 185 square meters) and see how the cost looks in one area versus another.
Today I compared several areas and cities using the same formula: homes of 1800 – 2200 SF, 3-5 bedrooms, 2-3 bathrooms, on lot sizes of 6000 SF to 10,000 SF that have sold within the last 90 days (120 days when there’s less inventory, 60 when there’s more). Here’s how it shakes out in the “west valley areas” along the Highway 85 corridor. What areas are most affordable? One way of analyzing this is the “price per square foot” figure. How competitive is it? Have a look at the DOM or “Days on Market” figure. All of these days on market are short, but they range from low to heart-skipping fast. Please also note that while most of these numbers are working on a handful of sales, Mountain View and Saratoga had only two each over the last 3 months that fit the criteria, so the data may not be as accurate in that row as others, like Cambrian in San Jose which had 23 sales in the same time. Now let’s have a look.
How much have prices changed? I’m trying a different approach this time to arrange the chart, showing areas that have moved up on the chart in white and those which have moved down in the darker rows. While that shows how prices have changed in relation to other areas, and for the most part the rankings don’t change very much. Compare each individual market to where it was last July and you’ll see that prices everywhere are up from summer 2017.
This chart was from last July.
Below is another flashback to March 2017. Do you notice the difference in ordering? A couple of markets have switched places, Sunnyvale and Saratoga, but there’s not too much different. For the most part, rankings have changed very little.
This next chart was from last March.
In most cases, the most expensive and desirable places have either the best schools or shortest commute location. Had I ranked these for school scores, you’d find that Cambrian is fairly high up and a good “bang for the buck” location – though not a super short commute for folks who work in Mountain View (though not so bad for people working in Cupertino). None of these is especially close to North San Jose (Cisco).
What about a little longer term? What did this look like in 2013? Click through to see. Continue reading
Edit: I originally wrote this post on August 12, 2013, but it is still accurate today, January 25, 2018, and probably will be for years to come.
- Palo Alto (very costly)
- Cupertino (less expensive for the school scores compared to other areas up to #5 on this list)
- Saratoga (very expensive)
- Los Altos & Los Altos Hills
- Los Gatos & Monte Sereno (95030 & 95032)
- Parts of San Jose in Cambrian 95124 and Almaden 95120 (very good value)
- The Los Gatos Mountains (zip code 95033)
- Parts of Fremont (Mission San Jose area)
As I was going through old blog posts, I found this brief installment from April 17th, 2014. Often I write that the current hot sellers market in the Bay is “prolonged,” “steady,” or “persistent,” but seeing these two headlines from over 3 years ago really shows just how unyielding it has been. It is highly unusual to be in such a strong, drawn-out market, but there’s no clear indicator that things will change anytime soon, either. Buyers and renters might find some relief now that autumn is here in hopes that it brings the usual seasonal cooling.
Find the original post immediately below. – Update October 22nd, 2017
Here are the headlines from the San Jose Mercury News in mid April 2014:
Rental article: Bay Area apartment rents set record 4/16/14
Excerpt: Bay Area apartment rents are rising at nearly double-digit annual rates and have reached record levels, according to a report released Tuesday, prompting some analysts to warn that the region’s economic boom could be choked off by the relentless rise….. Among the Bay Area’s three largest cities, San Jose had an average asking rent of $2,066 during this year’s January-March quarter, up 10.3 percent from the same period last year, RealFacts reported. Oakland had an average rental rate of $2,187, up 12.3 percent, while San Francisco posted an average of $3,057, up 9.5 percent.
Home buying article: Bay Area home prices jump year over year
Excerpt: March marked more than 20 consecutive months of year-over-year price gains for single-family homes in the East Bay, South Bay and Peninsula, according to real estate information service DataQuick, which released a report on March sales Wednesday…. The San Diego-based company said that prices were up 29.2 percent from the previous March in Alameda County to $575,000. In Contra Costa County, prices rose 22.8 percent to $425,000. Santa Clara County gained 20.3 percent to $800,000, and San Mateo County was up 13.2 percent to $860,000.
Whether you buy or rent, prices have been rising dramatically. When factoring in what housing will cost, include the trajectory of appreciation per month.
Shared housing is a way that many Silicon Valley employees work around the high cost of renting a home here. A bonus is that if you’re relocating to the San Jose – Cupertino – Palo Alto area or nearby, it’s that much easier to meet people in a communal living situation. For many, that means renting a house with a number of other people. In some cases, it translates renting a bedroom in a house where the only other residents are members of the same family. Either way, it helps to beat the high real estate costs, and may enable those who choose to live in a group setting to save faster to buy their own home.
To many, shared housing seems like a new concept, but I remember doing it when I was just out of college and teaching in the Los Angeles area, where rents seemed sky high to me at the time. When I returned to grad school, I did it again. Both experiences, though, convinced me that a longer commute and living along OR a shorter commute and living in a smaller space (a studio apartment) was a good trade off. Of course, this was in the 1980s, and we did not have web tools to help us to screen and find like minded roommates or house mates. I suspect it’s a lot better now.
Not having used any of these shared housing services, I cannot endorse any, but there are a number of sites to find house mates or communal living, and there are some companies which specialize in matching people to openings. If any of my readers can endorse a company or site, please let me know by email and I’ll update this article with that information. My word of caution, though: never send money by wire to someone you don’t know for an apartment or home you have not seen. There is a very serious problem with wire fraud, and you do not want to put your hard earned money at risk. Be safe out there!
Read more on the Silicon Valley real estate market:
Read about the various real estate markets by area within Silicon Valley: http://sanjoserealestatelosgatoshomes.com/
Get market stats for San Mateo County, Santa Clara County, and Santa Cruz County: http://popehandy.rereport.com