Monday, July 8, 2019

Q2 2019 Silicon Valley Real Estate Market Update - The Tale of Four Markets

In the first quarter of this year, the real estate market had a slow start, both here in the Silicon Valley and nationwide. Buyers remained hesitant from the slow bear market that took place in the latter half of 2018. Many thought that this was the end of the real estate market and that we were in a full recession. However, in the second quarter, the market picked up variably and manifested itself into 4 market segments: Luxury, Prime Locations, Single Family Homes and the Condominium/Townhomes.

The Tale of 4 Markets

Overall the market is more balanced with the advantage skewing in favor of Buyers. Actual performance depends on the specific market segment. Homes in fully renovated condition and/or in prime locations continue to sell at a premium, quickly and with multiple offers. Sellers continue to struggle with the reality of the market by holding onto prices from the peak market last year. Those that do, find their homes sitting longer on the market with very few visitors every week and lower prices to no offers. Buyers that do offer are not willing to pay last year’s prices and often have other homes on the market to pursue. We have seen anywhere from a 10% to 20% drop in prices since last year in varying neighborhoods.


The Luxury market will continue to be its own market segment. These Buyers are looking for “the” home that matches “their” requirements. They have the means regardless of the state of the real estate market, though the number of available competitors reduces in a down market which is to their advantage.

Prime Locations

The age-old adage “Location, Location, Location” really shows itself in a declining market. In the Silicon Valley, a Prime location is defined as a pairing of an excellent school district with the closest distance to work. This segment has made a comeback in the second quarter with the return of multiple offers and competitive bids, albeit not as aggressive as the price overbids in the last decade.

Single Family Homes

Single Family Homes have always been the preferred home class for Buyers. It is preferable to own the lot with space for the family, with no Homeowners Association (HOA) rules and possible increases in the monthly fee or special assessments. Single Family homes around the million dollar price range continue to sell due to affordability. Single Family homes greater than a million dollars will vary depending on the neighborhood but will generally struggle without a strong school district and location.

Condominiums and Townhomes

This market segment has been decimated and extremely slow. One of the key reasons is that there is quite a bit of brand new home construction coming online. When the market shifted, new home builders scrambled to acquire land that they had stopped purchasing during the downturn. Once acquired they have a long and arduous process of design, city and county approval for their plans, and the leg work in order to get their developments online, which all take time. As these finally start coming to fruition the market turns, and this product group floods the market with more inventory in addition to what is on the market. The second reason is that prices have risen so high and with a market correction, Single Family homes are more within reach. Homes with excellent schools paired with locations have not seen an impact.

Santa Clara County Real Estate Snapshot


As we head into election year, most presidents have kept the economy stable in order to support their re-election. The key wildcard is the China trade war which continues to weigh on the markets. However, the NASDAQ hit yet another record this week and despite the volatility, Silicon Valley workers do have equity to tap into if they choose to. The Federal Reserves has signaled that they may drop interest rates sometime this year which will help the real estate market by lowering interest rates further. These are all important foundations for the real estate market.


The Silicon Valley continues to hum along with low unemployment rates and multiple initial public offerings (IPO’s). The blackout periods have yet to free up capital that will surely be poured into real estate. We are expecting Q4 2019 and much of 2020 to have an influx of homebuyers centralized in San Francisco, the Peninsula, the South Bay and parts of the East Bay as well.

Interest Rates Have Dropped; Time to Refinance or Purchase

It is time to refinance your mortgage - especially the 30-year fixed mortgage. Rates have trended downward and have hit and surpassed the lowest point in the last decade allowing you to reduce hundreds of dollars off of your mortgage. The 30-year, 10-year and 7-year fixed products all have excellent purchase rates. Needless to say, you can buy more house with these lower rates. For those of you that are cash heavy, our lender can also drop your rate by approximately 0.125% for every $250,000 of assets under management. Re-casting is also a feature that our lender provides. Re-casting is when you pay down your mortgage by $20,000 or more and your monthly payments are re-calculated and brought down if you so choose to do so.

Looking Forward to Q3 2019

As we wrap up the summer months, inventory levels tend to peak in July and homes that don’t sell linger into the fall season. This year the Days On Market have been longer and we will likely continue clearing out inventory for months to come with fewer homes coming online as the year progresses. Not all homes will sell, hence we will likely see more canceled, expired or withdrawn listings. With interest rates dropping to again historical rates with another looming federal reserve rate drop, mortgages won’t stop Buyers from purchasing. The question is, do Buyers feel confident enough in the economy and market to make home purchases? More importantly, have Sellers come to terms with home prices dropping anywhere from 10% to over 20% in the last year? If you are a Seller being patient, making the necessary updates to stand out from the competition and adjusting your price expectations will be the key to selling your home. If you are a Buyer, unless you are going for a home in the prime locations, the advantage is on your side in every way.

Contact Us

For a customized real estate consultation or more details on these loan programs, reach out to us at (408)313-4352 so that we can analyze your specific real estate situations!

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Monday, April 1, 2019

Q1 2019 Silicon Valley Real Estate Market in Equilibrium

2019 has started off with the market attempting a recovery from a cruel summer and winter real estate market for especially for Sellers last year. Buyers are generally out and about, although they seem concerned and wondering if the market will drop further. However, in the past few weeks we have seen an uptick in Buyers actually making offers and getting into contract. Let us dive deeper in the various dimensions of this new market in equilibrium.

Silicon Valley Real Estate Snapshot – Santa Clara County

Exhibit 1 – Santa Clara County Real Estate Snapshot January 2019 to March 2019

More homes came on the market in the Q1 than in Q4 2018. This is not surprising given the holidays months Sellers are less willing to go on market during this time. Interesting statistics are the amount of homes taken off the market in Q4 2018 which has added to the inventory levels as they were re-listed this year, further increasing the available inventory on the market. The good news is that Buyers are purchasing and working on clearing out the existing inventory of homes. Sold units have increased since last quarter but the days on market have increased by over double, in short homes are taking longer to sell. We anticipate inventory levels to continue to rise as we approach the summer months.


On a Macro level there are many factors that continue to contribute to the fluctuation of Real Estate; such as Interest Rates, the NASDAQ index and the Trade War with China.

Mortgage Rates

The Federal Reserve has officially announced that they do not plan to raise interest this year. In fact mortgage rates have seen a decline since. Many of our clients have refinanced their loans and those with liquid cash or investments in major banks can take advantage of further mortgage rate reductions as well.

Exhibit 2 – 30 Year Fixed Mortgage Average in the United States

Source – St Louis Federal Reserve -

Trade Wars and the NASDAQ

There has not been substantial movement on the Trade War with China. The key movement has been the recovery in the stock market, specifically the Technology rich NASDAQ, which has recovered nicely from the low point in December.

Exhibit 3 – NASDAQ Snapshot April 1, 2019

Source – Yahoo! Finance

Tech Initial Public Offerings (IPO’s)

Lfyt went IPO on Friday and projections are that Uber (filed in December), Slack (filed in February), Pinterest (filed in March), Postmates (filed in February) and Zoom (filed in March) are the next on deck. With the exception of Zoom (based out of San Jose), all of these companies are based in San Francisco. What this means is that the wealth will be centered in San Francisco, the second tier will likely be homes on the Peninsula for families looking for better school districts and lastly the third tier will be the Southbay for those that commute to the city or those with a spouse that is based out of the Southbay. Remember, when a company IPO’s there is typically a 6-month lockout period before employees are allowed to sell their shares. It likely won’t be until late this year to early next year before the liquidity will actually be realized in our real estate markets. 2020 will shape up to be an interesting year where likely all of this liquidity may actually be invested into the Real Estate market.

Bay Area Sentiments

As we are coming off peak of the last gold rush both in housing and in stocks, many are taking a step back and re-evaluating the Silicon Valley financial and physical impact on their lives. What many outsiders fail to understand, is that the Silicon Valley is a constant grind, pure hard work and full of stress to make ends meet. There are frequent choices between working on the next innovation and trading off ones’ health and time to work verses time with their families. The sheer number of people in the Bay Area has taxed the infrastructure causing horrid traffic issues. Due to the high cost of housing, many are pushing 3 or more hours just on the commute to get to the office. Due to these factors some have chosen to leave the Bay Area in search of better work life balance and more affordable housing.

Looking Forward to Q2 2019

With lower interest rates, a rebound in the stock market and more inventory, the market is trying to jumpstart itself from a brutal latter half of 2018. Though the market is more balanced Buyers are still in the driver’s seat. Buyers are looking for move-in ready homes that require little to no work, are generally not interested in aggressive overbidding (except exceptional homes) and are not in a hurry and taking their time. On the Selling side, Seller must let go of Q2 2018 prices which was the peak of the market and be ready for longer days on the market and be ready to negotiate in order to get the home sold. We do anticipate more and more inventory to come on line as is typical in the summer months which means more competition for Sellers and more choices for Buyers.

We are hoping you are enjoying the upcoming months of sunshine!

Reach out to us at (408)313-4352 so that we can analyze your specific real estate situations!

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Thursday, January 10, 2019

2018 Silicon Valley Real Estate Year in Review and 2019 Outlook

2018 Year in Review

2018 has been a roller coaster ride for the Real Estate market. We kicked off 2018 the same way 2017 went all year in an extreme Sellers’ market, with multiple Buyers fighting tooth and nail to win a small amount of homes. Around April of 2018, the market screeched to a halt; homes sat for a month to 2 months or more and it shifted to a more balanced market. Buyers were in a "wait and see" mode, and the Buyers that were ready to buy held strong to their positions looking for a deal. Sellers willing to come down on pricing and were patient sold their homes, but the ones that were holding onto peak pricing did not sell, sat on the market, cancelled their listed or rented out their homes. Buyers got more particular so homes that were re-modeled were highly coveted, as opposed to homes that were not. We saw an average price drop of anywhere from 10% to even 20% in some areas.

Silicon Valley Real Estate Snapshot – Santa Clara County

Looking at the data since Q4 of 2018 there is some good and bad news. For Sellers it is refreshing to see inventory levels (your competition) drop by 49%/39%. For Buyers this means that there are less homes to buy for now. We are expecting inventory to ramp up week by week and peak in the summer season, expect competitors will increase and Buyers will have more home choices. For Sellers the other key metrics are not in your favor. The average time homes have been sitting on the market are going for 72/57 days, meaning homes were sitting on the market twice as long than in Q3 2018. The number of days for Sold homes have increased slightly, but the number of actually sold units half dropped by about half. This means about half of the inventory in Q4 did not sell and many may come back on the market this year. Overall none of these are great trends for Sellers, better news for Buyers, overall a more balanced market nonetheless.

Exhibit 1 – Santa Clara County Real Estate Snapshot October to January 2019


On a Macro level there are many factors currently in-flux which are contributing to the de-stabilization of Real Estate; such as Interest Rates, the NASDAQ index, Trade Wars and Protectionism.

Mortgage Rates

First off interest rates have leveled off and moved downward slightly. The Federal Reserve has indicated that it would throttle off a bit from the interest rate hikes in the interim, likely due to the volatility in the economy. This may get more buying activity from the Buyer pool.

Exhibit 2 – 30 Year Fixed Mortgage Average in the United States

Source – St Louis Federal Reserve -

Trade Wars and Protectionism

The NASDAQ Index was hammered most of December but has rebounded 8% from the lowest point last year since Christmas Eve. They new hope is that the US and China trade wars can come to a settlement soon. Remember the health of Technology stocks on the NASDAQ are directly correlated to Silicon Valley housing downpayments that power the real estate market. The Government deadlock and shutdown is unprecedented and is also weighing on the minds of the public.

Exhibit 3 – NASDAQ Snapshot January 11, 2019

Source – Yahoo! Finance

Looking Forward to 2019 
Just 2 weeks into 2019, inventory levels are low due to the holiday season. At the moment, the homes that are out on the market are selling quickly - some with multiple offers. The trends of homes in good/move-in condition are selling better than homes in original condition, and some homes are receiving multiple offers, are back for now. If you are a Seller, you may want to strike while the iron is warm. As a Buyer, you will need to adjust from last year's slower market until inventory levels catch up to demand, and possibly get slightly more aggressive in the short run if needed. There is still residual inventory from the winter months and you maybe able to get a deal on those properties. Continued instability in our government, international trade war talks and a continually volatile stock market have brought uncertainty to our Real Estate Market in 2019. All of these will be factors to monitor in the coming year and will directly have an impact on Silicon Valley Real Estate.

We hope you had an amazing winter break. Reach out to us at (408)313-4352 so that we can analyze your specific real estate situations!

Happy New Year!

We hope that you and your families had a restful holiday break! A big thank you for being amazing advocates of our real estate business! It is because of your never ending referrals, loyalty and support as our customers that we were able to help over 105 families in 2018. It was you that helped propel us to be the 64th team in the world out of over 195,000 Agents at Keller Williams. We cannot thank you all enough for all of your support!
Reach out to us at (408)313-4352 so that we can analyze your specific real estate situations!

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Thursday, October 25, 2018

Q3 2018 Silicon Valley Real Estate Update - Stabilization in Effect as Home Prices Continue Decline

Q3 2018 has been yet another eventful quarter in our continuing shifting stabilizing Silicon Valley Real Estate Market. Please find our update to help guide your real estate decisions!

Home Prices Peaked

Home prices peaked in the month of May and this market shift came very quickly. As mentioned in our Q2 update, the reasons were exhausted home bidders, unaffordability of prices, the drop in the NASDAQ Index in April, tax filing deadlines, coupled with a rise in inventory for the summer months. Homes started to sit on the market and Buyers took a wait and see approach which has continued until now and likely the rest of the year. The conundrum is that there are still Buyers out there, however affordability continue to be a concerning factor.

Exhibit 1 – Santa Clara County Real Estate Snapshot July to September 2018

Taking Santa Clara County as a sample comparing to data from Q2 2018, the amount of Active homes increased in the Single Family Home category by 31% while Condominium/Townhomes increased by 93%. Subsequently the days on market also increased dramatically for Sold and Active homes in both categories. What is interesting is that Sold Units more than doubled the amount of units in Q2. This shows that Buyers demand is still there paired with more quantity of homes on the market during the summer months to purchase. In short, inventory and days on market are up, but Buyers are still purchasing homes but they are taking their time and looking for better pricing and more favorable terms. The crazy bidding market is gone and the Buyers in the market are at an advantage.

Exhibit 1a – Santa Clara County Real Estate Snapshot June 2018

Source - MLS Listings Database REIL June 2018


On a Macro level there are many factors currently in-flux which are contributing to the stabilization of Real Estate such as the NASDAQ index, Trade Wars, Protectionism and Rising Interest Rates.

Health of Equity Markets

The key concern is the health of the Stock Markets, especially the Technology-heavy NASDAQ index, which is the source of the majority of the down payments in the Silicon Valley. Notice the drop back in April and now another two recent drops in October. Oddly the economy and companies have generally been showing good overall health. There have been some companies that have revised lower guidance on earnings but most have shown decent earnings. Investor sentiment seem to be expressing concern across the board especially of a possibly overheated Technology sector and therefore companies being overvalued. We have just experienced the largest sell off in the second and third weeks of October and the markets have continued to show volatility since.

Exhibit 2 – NASDAQ Snapshot October 25, 2018 

Source – Yahoo! Finance

Trade Wars

The trade war with China is causing concerns about the impact to both economies. Companies who export from China are seeing their margins wiped out and goods from China could get more expensive here in the States. Companies that export to China will see a hit in revenue due to the counter tariffs from China. There is much concern from investors on the ultimate impact to profitability and this subsequently will affect equity values and our economy.


The current protectionist policies are making the visa and residency process even more difficult than they have previously been. Many key believers in purchasing real estate in the Silicon Valley are typically from abroad. With this uncertainty, Buyers are holding off on their home purchases, heading home or heading to countries with simpler more transparent visa processes.

Interest Rates

Federal Reserve interest rates have been increased 3 times this year. This will ultimately impact affordability. Some Lenders have been able to keep interest rates around the 4.5% to 4.75% range. Some other lenders have touched the 5% mark.

Exhibit 3 – Federal Reserve Interest Rate

Source – St. Louis Federal Reserve

Despite concerns about affordability and rising rates, interest rates are still at historical lows.

Exhibit 4 – 48-Year History of the 30-Year Fixed Mortgage Rate

Source – St Louis Federal Reserve

Seasonality, Buyer and Seller Advice

As we approach the holiday season, regardless of the overall market conditions, this tends to be the slower season for Real Estate overall. If you are a Buyer, this is your market to obtain deals due to the season and current market conditions. Lower down payments, under list price offers, contingencies and long closes are all possibilities. If you are a Seller, homes are still moving if we price them properly it should move in 17 to 30 days. The hardest part is to understand the market and not going after peak pricing that passed us in April. That market has passed us at this point.

In Conclusion

To be clear the market is still a healthy and more balanced. Silicon Valley Homeowners have been spoiled by homes selling in a week with multiple offers which was never scalable. With the latest concerns especially around the equity markets and rising interest rates coupled with the slower typical seasons, Real Estate in 2019 should continue to stabilize and could possibly also mirror the volatility of the equity markets. Though we cannot predict the future, it is likely that 2019 will be another more stable and balanced market for real estate.

We wish you the best as you close out 2018! Reach out to us at so that we can analyze your specific real estate situations!

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Monday, July 2, 2018

Q2 2018 Real Estate Update - At Long Last the Market Shifts to the Buyers’ Favor

We are excited to share our Q2 2018 Silicon Valley Real Estate update. We will start off by saying that the market has at long last SHIFTED to the Buyers’ favor! It has been a roller coaster this year and we have many areas to update you on!

January to April – Red Hot Sellers’ Market

The beginning of the year continued the previously hot Sellers’ market of 2017. The same story continued this year; low inventory levels, large quantity of Buyers, intense bidding wars, prices rising on a weekly basis and each home selling aggressively more than the previous week’s sale price. If a Buyer had less than 30% percent downpayment and did not make it into the top 3 offers, they would have had little to no chance to win. Agents and Buyers had to be aggressive, constantly following up, overbid pricing by emotion, waive all conditions on their offers, close quickly and give in to the terms of the Sellers. The Sellers during this period truly maximized their gains both on pricing and terms.

April and May – The Turning Point

In April we started to see some softening in the market as we started to notice fewer offers per listing. We monitored this trend to see if this was signaling a possible stabilization in prices. Literally the first week of May we saw Buyers stop in their tracks. The typical indicators remained strong; Open House traffic, Agent Showing traffic and Disclosure requests all showed normal activity. We were setting offer dates as we have for the last year and a half expecting the same multiple offers, and for the home to sell significantly over list price. That activity came to a screeching halt. Listings got one to two lower priced offers and many had none at all. 11 weeks in now we can confirm that the market has shifted to the Buyers advantage for the first time since 2017. Not all markets have been affected but slowly this is trickling into all price points.

What is Causing this Market Stabilization?

Understanding this market stabilization requires analyzing the historical and current trends both at a Macroeconomic and Microeconomic level.

Footnote on Sustainability and Seasonality

It is important to note that this type of aggressive Sellers’ market was never sustainable. Even as Realtors in the business, we would watch our listings blow through the last comparable home sales and we have always known that at some point there must be a stabilization. It is also important to note that it is abnormal for a market not tohave cycles for such a long period of time. We typically have seasonality in our local real estate market. The same stabilization happened in June of 2016 as well and in years past, so none of this is out of the ordinary whatsoever.


The key question is what changed at the macroeconomic level that would cause a direct correlation to this market stabilization? The first key indicator for the Silicon Valley is the health of the Stock Market, especially the Technology-heavy NASDAQ index. These stocks are the source of the down payments fueling real estate in the valley. International cash offers have been slowed down significantly and heavily scrutinized, hence recent real estate activity is directly correlated to local Technology stock funds. It is interesting to note that on April 2, 2018 there was a low point in the market after the peak set on March 5, 2018. This brief drop even though it lasted a few weeks could have been enough to pause multiple Buyer’s home searches. The second economic indicator is that April is tax month; with a drop in stock prices and likely capital gains to pay, it is possible that Buyers found themselves cash strapped with unexpected tax bills.

Exhibit 1 – NASDAQ Snapshot April 2, 2018

Source – Yahoo! Finance

The third economic indicator would be that the Federal Reserve interest rate rose in April as well. In essence this was a third level of change for Buyers to adjust to, which was more psychological than material, as mortgage rates do not immediately adjust to the Federal Reserve rate changes. However, it is human nature to dislike change and it is likely that the combination of these factors caused the current market stabilization.

Exhibit 2 – Federal Reserve Interest Rate

Source – St. Louis Federal Reserve -

There are also grumblings of trade wars with other countries that weigh on the minds of many Americans and that impact is yet to be seen. If these changes affect stock values and our economy then that will be the direct impact yet to be seen.

It is our opinion that the combination of Macroeconomic factors such as a dip in stock prices, income tax season, and increasing interest rates all played a part in this halt in the real estate marketplace.

Microeconomic Factors

There are other factors more local to our area specifically that we should bear in mind.

Buyer Fatigue, Rising Prices and Rising Inventory

It is likely that buyers have become tired of this bidding war environment for the last year and a half and are taking a break. It hasn’t been easy as a Buyer fighting with 10 to 20 Buyers per home, giving up your rights and moving at lightning speeds. Prices were also at all-time highs, and this coupled with rising interest rates may have given Buyers psychological pause. It is also important to note that in the Silicon Valley we have seasonality as well. The summer season is when most homes come on the market equating to more inventory, and Buyers have more choices. It is natural in those cases that homes will sit longer on the market.

Exhibit 3 – Santa Clara County Real Estate Snapshot

Source - MLS Listings Database REIL 2018

Silicon Valley Employment

Employment rates in the Silicon Valley are at all-time highs and the health of the Silicon Valley employment market continues to be strong. From last year, employment has risen by 3.1% and the unemployment rate down to 2.3%. These are all healthy statistics for our local market.

Exhibit 4 – Santa Clara and San Benito Counties Employment Data

Source - Employment Development Department -$pds.pdf

Silicon Valley Commercial Buildouts

Local Technology Giants continue to expand all across the Bay Area. From Facebook picking up real estate in Sunnyvale and Fremont, to Google’s build out in Downtown San Jose, this supports the fact that hiring is strong as companies continue to fight for commercial real estate across the valley.

Mortgage Interest Rates

There is no need to panic because rates are slightly on the rise. Interest rates are still at historic lows! Ask Buyers who bought in the 80’s how high their rates were. Certain banks have been offering deposit incentives for a lower interest rate; these types of programs exist as well.

Exhibit 5 – 47 Year History of the 30-Year Fixed Mortgage Rate

Source – St Louis Federal Reserve -

Buyer Advice

If you are a Buyer you can at last celebrate that the market has finally turned in your favor and it will likely continue to be the case for the rest of the year. The key question is will you follow the herd and wait, or will you take advantage and go for a home when less Buyers are doing so? It is very possible that the herd will be back once again in the spring. Do you want to follow the herd as they were bidding this year? Buyers tend to have the most choices in the summer, though they will find better deals in the fall, but not as much selection on houses during the latter seasons. If you have been thinking of buying, we highly recommend that you re-engage while the market is on your side.

Seller Advice

If you are a Seller this will be the toughest market for you, as likely you have been used to seeing homes selling in a week and over the last sold price consistently, and that activity has now halted and turned the other direction. Currently prices are going the opposite direction from the last peak prices 11 weeks ago. We are seeing 10% to 15% drops from last peak prices in some locations. This change is especially hard to accept. The first off market or first week offer could be your best offer. Waiting longer gives the Buyers even more advantage as the freshness of your listing goes stale and they begin to low ball you the longer your home sits on the market. Expect longer days on market, as much as 30 to 45 days. Houses are still selling just taking more time. Again, selling a home in a week was never sustainable. Buyers are taking their time, looking for deals and they have other options on the market. If you have owned your home for some time, celebrate your gains. You may have missed the peak of this year but coming off peak isn’t the worst scenario in the grand scheme of things. If you are looking to maximize, you may need to wait for a different season that is more to your advantage, assuming the market isn’t turning into a longer-term bear market. If you believe the market is turning for the long run, then it would make sense to take your games and exit the market.

In Conclusion

It is important to note that we do not have a crystal ball. Given the typical seasonality of our local market, it is likely that this market will remain slower now and for the rest of this year with an advantage to the Buyer. Looking forward, it is true that we are in year 10 of this bull market. There is always a possibility that a major shift is occurring and the market turns into a bear market now and for the foreseeable future. However, given the fact that the economic indicators appear to be more short-term blips than anything longer term, there is a big possibility that 2019 will be the return of the fierce Sellers’ market once again.

We wish you the best for the rest of 2018! Reach out to us at so that we can analyze your specific real estate situations!

Exhibit 6 – NASDAQ Snapshot July 2, 2018 – Market has already recovered from the last lull in April