April 2025 Silicon Valley Real Estate Update

This has been the most eventful month in history as far as our economy is concerned. Within a month we have lost 25% in stock positions. Never in the history of our country have we intentionally put our country into a financial crisis. Regardless this is the new reality. We are creatures of habit and there is a shock factor to this type of situation. At the same time we do need to take a step back. Real Estate and Stocks all have their ups and downs. It is important to note that in the long run we will be fine. The market is back to the levels of 2023 but depending on when you bought in there are still gains.

NASDAQ Performance

NASDAQ

Here is a chart of the NASDAQ since COVID. Depending on when you bought in there are likely still gains to be had if you needed to funds to say purchase real estate for example.

NASDAQ Closing Values 2020 to Present

Even more fascinating is to put this in chart form. If you had bought in during COVID you would still be up 123%. Depending on which year you bought in or starting your job there are likely gains to be had.

NASDAQ Gains and Losses Since COVID

Buyers

In the words of Warren Buffet “when there is blood in the street I buy.” It is human nature to follow the herd. When everyone else is overbidding for homes it must be a great time to buy. The fact of the matter is that the ones that are the most successful do not follow the herd they pave their own way. Those are the ones that bought during 2020 when COVID happened, those are the ones that bought in in 2022 when inflation was high and they reap the rewards. My advice to Buyers if you and your family need a home and have been relentlessly fighting with other Buyers now is your time before the dust settles. There are deals to be had, be brave, be bold and don’t follow the herd. Real Estate is a limited product in the Bay Area and when the dusts settles Buyers will all need homes once again.

Sellers

This is a tough time in the market unfortunately. We have to have plans upon plans. The market seems to be on a temporary hold as Buyers digest this sudden loss of 25% of their wealth. That is not a great feeling for Buyers. There is a batch of Buyers still out there from the last batch that is out and ready to buy. Once the dust settles, Buyers will be back once again. Be ready for longer days on the market, bringing the home back on the market and as a backup backup plan leasing it out for a better market. You will have to adjust your price expectations as well.

Consultation

Each of you all have your unique scenarios for you and your family. Reach out to me for a personal strategy session so that we can make the right choices for you. Message me on Linkedin, call or text me at (408)313-4352 or e-mail me at alan@alanwangrealty.com.

February 2025 Silicon Valley Real Estate Review

 Here is our February 2025 Silicon Valley Real Estate Review!

2024 Silicon Valley Real Estate Year-in-Review

 

Here is our 2024 Silicon Valley Real Estate Year-in-Review! For a personal session call or text (408)313-4352 or e-mail us at homes@alanwangrealty.com.

February 2024 Silicon Valley Real Estate Update - Aggressive Bidding Wars are Back

As predicted in our 2023 year in review, imagine if the rates went down how competitive the market would be? 2024 answered this question and the answer is aggressive bidding wars. The market has kicked off on fire for Sellers. Rates dropped from half a percent to a full percent and Buyers are done delaying their home purchases. More Sellers are content with the lower rates and putting their homes out for sale than 2023, although it will be unlikely to be enough to satisfy demand. We expect 2024 to be a Sellers’ market.

Video Summary - https://youtu.be/NiCYEU2QXdE

Live Listing Case Studies

Here are some live case studies from our home sales this year.:

• 1166 Spencer, Mountain View, CA – 7 Offers, Sold $292,000,  6.8% Over List Price
• 632 Spruce, Sunnyvale, CA – 20 Offers, Sold $617,000, 29.5% Over List Price
• 656 Giannini, Santa Clara, CA – 20 Offers, Sold Price - $2,450,000, $552,000, 29% Over List Price
• 921 Gridley, San Jose, CA – 14 Offers, Sold 20%+ Over List, Sale Pending
• 2426 Cory, San Jose, CA – 12 Offers, Sold Off Market 20%+ Over List, Sale Pending

Inflation Rates

Inflation rates rose slightly in December and dropped in January. We are seeing an uptick in February. With these 2 increases, the Federal is in no hurry to drop interest rates.

Exhibit 1 – Inflation Rates

Mortgage Rates

Rates were in the upper 6% to over 7% in 2023, which forced many Sellers stay in their current homes. This year rates have dropped to the lower 6% range but still fluctuating. This drop was enough to get more Sellers to sell their homes this year and Buyers to come back into the market in droves.

Exhibit 2 – Mortgage Interest Rates Nationwide

Exhibit 3 – Local Mortgage Interest Wells Fargo Home Mortgage 

NASDAQ Stock Index

The NASDAQ Stock Index which indicates the health of our technology companies is at an all-time high. We saw a 30% increase in 2023 and currently a 6.8% increase year to date. The majority of offers that I am reviewing are from employees at Google, Apple or Meta. The stock portfolios are the source of down payments for Silicon Valley home buyers.

Exhibit 4 – NASDAQ Stock Index

Unemployment

A bit concerning is despite the stock values of technology companies at all-time highs, this has not stopped the sector from laying off and continuing hiring freezes. An issue to monitor is the unemployment rate. Traditionally at 4.5% to 4.6% in California, we are currently the rate at 5.1%. So far this is not high enough to cause any issues in the housing sector, but this is a datapoint to monitor. Despite layoffs all of last year, there were still a large number of layoffs in January of this year in the Technology sector.

Exhibit 5 – California Unemployment Rate

Exhibit 6 – Layoffs in the Technology Sector

Conclusion

This market is not for the faint of heart. Buyers who are your competition are armed with heavy down payments, at times cash and ready to win. Be ready to compete hard to win. The silver lining would be to try to win a home sooner rather than later, as prices are increasing every week. If you are looking to buy, you would be better off getting in and getting out and increase your equity further. Sellers you will find that the market will surprise you on pricing, but some of you will find it hard to resist the temptation to aim higher than the market is willing to pay at that moment in time. A point to note, eventually Buyers do get tired of bidding wars, so take advantage while you still can. We anticipate 2024 to continue to be an aggressive Sellers’ market for most of the year.

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2023 Silicon Valley Real Estate Year-in-Review and 2024 Outlook

Video Summary - https://youtu.be/lwL-iUMXBRg

We wish you and your families a happy new year and hope the holidays were a good time to travel and to get some rest. 2023 was a very different year in real estate, the most different that we have seen in 20 years in the business. Interest rates were in the upper 6% to 7% ranges, causing Sellers to pause and stay in their homes as the switching costs were simply too high. Despite high interest rates, Buyers’ home buying needs continued as they needed to buy homes for their families. Buyers quickly realized that inventory levels were extremely low, which forced them into bidding situations once again. Economically we made excellent progress on inflation, bringing the rate down from 6% to 3.1%. Economists project that the Federal Reserve will drop rates in Q3 of 2024 and will likely hold steady for Q1 and Q2 of 2024. In anticipation of this, in December lenders lowered the mortgage interest rates to the lower 6% range. The NASDAQ gained 43% in 2023 which is great news for Silicon Valley tech buyers whose down payments and wealth are heavily tied to their employee stock plans. Layoffs have continued but have held steady overall and not in large numbers.

We anticipate 2024 to be a low inventory Sellers’ market this year. Those of you that were buying in 2023, we often asked ourselves the question, “what happens if rates dropped can you imagine the competition then?” In 2024, Buyers will be running into increased levels competition due to these lower rates and positive health of stock portfolios, paired with the economy trending in the positive direction is going to create fierce bidding wars. The hope is that the lower rates will encourage Sellers to move out of their homes so that Buyers have more inventory, but that is never guaranteed in the traditionally inventory stricken high demand area that we live in.

If you are a Seller, 2024 is going to be an even better year for selling real estate depending on where your home is located. As a Buyer, be ready for fierce competition as the lower rates increases the buying your power dramatically as well as that of your competitors. Every market and home type is different so do reach out to us for a more specific analysis of your home. Reach out to us through a direct message or email alan@alanwangrealty.com text or call (408)313-4352 for a personal consultation. Have a great start to 2024!

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