Lots has changed in the last year, and a general Silicon Valley real estate update is in order. This will be a brief post with broad commentary on what newcomers to the San Francisco Peninsula, South Bay, and nearby areas can expect in these markets. Particular cities, neighborhoods, and price points may be different.
- The housing market is quite robust for single family homes (mostly detached houses, but sometimes a duet home – not the same thing as a duplex*)
- It’s a far cooler market for condominiums and townhouses. (Condo is an ownership type, townhouse is an architectural style. Many townhomes are held in condo ownership, but some are planned unit developments, or PUDs. You can read more about the difference and why it matters in our other article through that link.
- In Silicon Valley, most of the time sellers provide pre-sale inspections and disclosures for buyers to review before putting an offer in on the property. Buyers are expected to read and sign for these disclosures before submitting an offer, and most buyers don’t hire their own inspections once in contract unless they need more details or bids on a particular item of concern. Often homes that sell within 10 days or so get multiple offers and sell with zero contingencies. This is often a sharp change for people coming from outside of this area with experience in other markets.
- Cash offers are happening, but the majority of sales happen with mortgages. Depending on the price point and home type, the percent of cash offers might be 20-30% of the market. But cash isn’t always king: sometimes cash buyers overestimate the value of their cash and they “lowball” the offer, or have less favorable terms. Sellers will wait a little longer and bet on the bank if it makes them more money, or they get their terms!
- A recent change here as with everywhere else, home buyers working with an agent need to have a written buyer-broker agreement to privately tour properties and be represented when making an offer.
- At open houses, the hosting agent is supposed to collect the visitors’ names and whether or not the visitor has a real estate agent, usually done on a non-agency form. This is NOT supposed to be for marketing, but only for clarification should there be a question later about who is or is not representing that buyer should they submit an offer. Some hosting agents will accept a business card from a visitor’s buyers agent instead of signing in. Some misuse the form, or are overbearing and will follow up for your feedback after the showing or to seek your business. I suggest that my clients put my contact info into the form, or just let me show them privately (something we and many clients prefer anyway).
- While some buyers get the first home they bid on, most write 2-4 offers before having one accepted. This is really not a new trend in the Silicon Valley real estate market – it’s been this way for years, but it can still be a shock to people relocating here. Extreme competition for the best homes, a shortage of inventory, and our persistantly hot market make it a challenging market for even the most qualified buyers.
- In our experience, only 50% of buyers who say that they want to buy a home will do so in the first year. Most of that is due to sticker shock and struggling with paying that much for a home. Yes, even for buyers with good Silicon Valley salaries! Unfortunately, waiting can be even more expensive as home values continue to grow.
- Areas with short commutes to major employers, and those with good schools, are hot all the time. For instance, Cupertino offers both and is a highly sought after and competitive market.
- Insurance has been a particular challenge in recent years, especially fire insurance. Fire risks and related insurance costs and availability are major concerns in areas near or in the hills particularly.
Silicon Valley real estate update in 2025 – what about condos?
Selling a house is relatively easy right now, though few homeowners are motivated to sell. Higher interest rates and property values make it more difficult to purchase today than a few years ago, and most owners don’t want to take the hit by selling and moving if they can make it work where they are. Many homes we’re seeing on the market are either have-to-sell or investment flips, rather than move-up or downsize sellers.
Selling a condo can be more of a challenge, especially if it has location deficits, lack of outside space, deferred maintenance, etc.
A townhouse in PUD ownership is often the easiest type of Common Interest Development (CID) ownership to sell. Banks and lenders view PUDs like single family homes and the lending guidelines are less stringent. When well staged, priced, and marketed, these are getting multiple offers and overbids.
With condominiums or condos (which can be shaped like an apartment, townhouse, or even detached house), it’s trickier. In those cases the HOA’s finances will also be part of the package. Many condo associations have underfunded reserve accounts. Last year we had a buyer in contract to purchase a condo with truly terrible reserves (less than 10% of fully funded) and that buyer could not get a conventional loan, so he backed out of the sale (he did have a contingency, we were careful with that since we knew it was a risk). Had he completed the sale, there was a good change of a special assessment and raised dues in the near future.
Note from above’s article on the Silicon Valley real estate update:
*Duplexes have 1 owner for both sides and they are considered investment properties. With duet homes, each side normally has different owners. Want more info? Check out our article What is the difference between a duplex and a duet home?
