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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September 2023 Silicon Valley Real Estate Update

 2023 has been a strong Sellers’ market year to date. Sellers have been holding onto their record low interest rates and unwilling to sell. Despite higher interest rates (6% to 6.5%), the low supply has brought the return of multiple offers on properties. Cash offers are abundant once again. However, we seem to be possibly entering into our seasonally slower season. Last weekend, open houses were slow for the first time all year. We are heading into that fall season and it is not uncommon to see a drop-off in activity as we head into the holidays.

Federal Reserve

The Federal Reserve decided to hold rates steady, yet leaving a window open for another rate hike this year. They want to make sure that inflation rates are under control and we don’t see them loosening quickly but slowly in the next year or two.

Seller Advice

As a Seller, the market is currently in your favor if you are looking to sell. Depending on your urgency, we should try to avoid the holiday season and plan for the spring market instead. Reach out to us for a direct analysis on your families situation.

Buyer Advice

Many of our Buyers have been offering and winning properties. Competition is there but not as fierce as it was during the pandemic. Some of you have expressed the desire to take the wait and see approach or frustrated with the low inventory. We certainly cannot control the inventory, but we certainly can control our mindsets. The market is competitive, there is no question, however imagine what will happen if the interest start to trend downwards. Suddenly Buyers can afford a higher home price and an even more aggressive bidding war emerges. Todays overbid could be tomorrows bargain and this is seen in our market year in and year out. As a Buyer take advantage of the upcoming slower season and be ready to move if you see an opportunity. People that succeed do not do so by following the crowd, be aggressive while others are on break before the next wave hits!

Thank You All For Your Support!

Despite a tough year in our industry due to low inventory, each and everyone of you continue to partner with us for your real estate needs. You continue to entrust us with your friends and family. We continually thank you for trusting us and we will always continue to elevate our expertise and level of service. Have a happy September!