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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