Farewell To The Frenzy? | A Silicon Valley Market Update

One of the best parts about being real estate agents is knowing exactly the first question you are going to be asked at a dinner party: ‘So…what’s the market doing these days’?. Thank goodness that’s not only the most common question we get asked…but one of our most favorite questions to answer!

Silicon Valley real estate is a machine all its own, and we continuously monitor the trends, track/analyze the outcomes and employ the data to drive decisive results for our clients. As we begin the final quarter of the year, we wanted to share some stats and trends from the last quarter to help pave the road for where we are headed this fall.

If we had to pick a theme for the fall, it might be ‘farewell to the frenzy’. Does that mean that Silicon Valley real estate isn’t hot? Absolutely not. It just means it’s not the sizzling, burning and fiery flame that dominated the spring and frustrated the vast majority of potential buyers.

NOTABLE INDUSTRY TRENDS INCLUDE:

• Home prices, while still rising, are doing so only by single-digit gains. The median price rose 1.8% in August over last year.

• We are seeing a drop in the number of offers, especially in the high-end of the market.

• Sales of single-family, re-sale homes have been lower than the year before seven months in a row. Year-to-date, home sales are down 9% in Santa Clara County.

• The median price of single-family, re-sale homes dropped below $1MM for the first time since February.

REASONS FOR THE ABOVE-MENTIONED MARKET SHIFTS:

• The IPO market in the Bay Area has dried up. While there were over 80 from 2013 to mid-2015, there has only been one so far in 2016. IPO money, and the instant riches it conferred, was a driving force in the upper end of the market the past few years. Of note, the San Jose Mercury News recently reported there were seven new IPOs announced in August.

2. Chinese buyers in the low and mid-range have disappeared from the market.

3. Buyers are much more open to waiting, especially in the high-end where they are much more likely to let a property go rather than get involved in a bidding war.

Overall, the high-end of the market appears to be slowing markedly, the low and mid-range are still holding up, yet demonstrating mildly reduced demand.

Data Drop: SINGLE-FAMILY HOMES

Year-Over-Year

• Median home prices increased by 2.1% year-over year to $985,000 from $965,000.

• The average home sales price rose by 1.2% year over-year to $1,262,610 from $1,247,380.

• Total inventory fell 10.5% year-over-year to 2,209 from 2,468.

• Sales price vs. list price ratio fell by 3.1% year-over year to 101.5% from 104.7%.

• The average days on market rose by 31.0% year over-year to 29 from 22.

Compared To Last Month

• Median home prices slipped by 6.2% to $985,000 from $1,050,000.

• The average home sales price fell by 1.2% to $1,262,610 from $1,278,010.

• Total inventory dropped 1.8% to 2,209 from 2,249.

• Sales price vs. list price ratio dropped by 0.7% to 101.5% from 102.2%.

• The average days on market increased by 23.7% to 29 from 24.

The information above may have been more than you ever wanted to know…or you may be wanting more! If you’d like to receive the full edition of our ‘Real Estate Report’, we’d be happy to pass along the data to help you make the best decisions for you. Whether it helps you drive a great conversation at your next dinner party (doesn’t everyone talk housing?!) or gives us some ground to catch-up on next time we chat with you, the power is yours. Email team@homesofsv.com if you’d like to be included!

All the best,

Mark & Jason