Silicon Valley January 2016 Market Update

We hope the new year is starting out well with all of your new goals and endeavors!  We are excited to have just celebrated our 13 year anniversary in the business and thank you for trusting us to fullfill the real estate needs of your friends and family!

January Market Update

In our last update the market cooled down in the fall and into the holiday months.  As the new year kicked off, we have had an uncharacteristically low amount of listings on the market.  We have returned to multiple offer situations.  Examples just in the last week we have run into are 31 offers in Milpitas, 5 offers in Burlingame, 3 Offers in Cupertino and 12 offers in West San Jose.  If you are a Seller it is highly advised that you sell your home as soon as possible, as there are very few homes on the market resulting in less competition.  Contact us for a custom evaluation.  Many of our peers have inventory coming on the market and there maybe an influx of homes coming shortly.  If you are a Buyer be ready to compete for houses or wait for more inventory to come onto the market.

Why the Stock Market Will Hurt Silicon Valley Real Estate 

The stock market continues to fluctuate day by day with an overall trend pointing downward.  Led by the China stock market and falling oil prices, there are major concerns that are dragging down equity markets.  We believe that this will ultimately have a direct effect on home prices in the coming years.  In 2015 with foreign cash inflows limited, Bay Area Technology employees were the key drivers of home purchases with their restricted stocks and stock options.  Decreases in the value of the stock market will directly impact the downpayments of Silicon Valley Buyers, reducing buying power and loan affordability.  Also IPO’s may also be delayed if market conditions are not favorable as well.  This is a dynamic to monitor in the longer term.

Join the conversation on Linkedin https://www.linkedin.com/pulse/silicon-valley-january-2016-real-estate-update-alan-wang

New Listing 3164 Kenland Drive in San Jose! www.3164Kenland.com

We are pleased to announce our new listing in San Jose!  Abundantly Bright Ground Floor Corner End Unit in South San Jose. Property boasts Hardwood Floors, Two Toned Paint, Recessed Lighting and Crown Molding throughout the home. Granite Countertops, Oversized Tiled Floors in Kitchen and Bathrooms. Patterned tile design in the showers. Convenient In-unit Laundry and 2-car Garage Enclosed Garage. Enjoy the Front Patio with a View of the Greenbelt. Walkable to Caltrain, Drive-in Movie Theatre and Local Schools. HOA fee of $290 includes Community Pool, Water, Cable, Roof, Exterior, Landscaping and More!

Pre-Market Listings

As part of the Alan Wang Realty Group network you have exclusive insider information on upcoming listings in red-hot neighborhoods.  If you or someone you know would like an off market opportunity to avoid competition let us know!  These listings will hit the market but have unique situations that could be a win/win for everyone.  More details on the listings below.

Make Me Move!

• Cupertino Single Family Home – Excellent schools! Sedgwick Elementary, Hyde Middle and Cupertino High.  5 Bedrooms, 4 Bathrooms, 4,100 square feet in the process of expanding to 4,725 square feet.  Built in 2002, Asking price is $3.6M Seller says to make them move! 
• Mountain View Single Family Home Built in 2012 – 3 Bedrooms and a Den, 3.5 Bathrooms, 1,568 Square Feet.  Asking price is $1,850,000, Seller would like you to make them move!

Upcoming Listings

• Highly coveted Varsity Park home in Mountain View with Los Altos Schools!  In a prime location with a close commute to Linkedin and Google, quickly access Downtown Mountain View, walkable to Varsity Park excellent schools Springer, Blach, Mountain View/Los Altos High Schools.  Seller’s are looking for flexibility on the close date as they need to find another property in the same neighborhood, lots of potential
• Executive San Jose Almaden property 4 Bedrooms and a Bonus Room, over 3,300 square feet of living space on a large 8,000 square foot lot, with a 3 car garage, excellent schools in a great neighborhood.  Seller’s looking for a flexible Buyer who can provide a rent back 
• Convenient Sunnyvale Condominium located in close proximity to Technology giants such as Apple, Linkedin and Google.  Quick access to highways and walkable to local park.  Attends Homestead High School.  Seller currently has a tenant in the property until March.  Contact us if you are interested in this opportunity  
• Large End Unit Townhome at Creekside Village in Morgan Hill, oversized backyard, multiple amenities such as a clubhouse, pool, spa, sauna, exercise room, tennis courts, and children’s playground

Pre-Market Listing Opportunities in 2016

As part of the Alan Wang Realty Group network you have exclusive insider information on upcoming listings in red-hot neighborhoods.  If you or someone you know would like an off market opportunity to avoid competition let us know!  These listings will hit the market but have unique situations that could be a win/win for everyone.

  Highly Coveted Varsity Park Home in Mountain View with Los Altos Schools!

      In a prime location with a close commute to Linkedin and Google, quickly access Downtown Mountain View, walkable to Varsity Park excellent schools Springer, Blach, Mountain View/Los Altos High Schools.  Seller’s are looking for flexibility on the close date as they need to find another property in the same neighborhood, lots of potential

      http://alanwangrealty.com/IDX/Fordham-Way-Mountain-View-CA-94040/2224377976/0005610

Executive Almaden Home for a Large Family

      Executive San Jose Almaden property 4 Bedrooms and a bonus room, over 3,300 square feet of living space on a large 8,000 square foot lot, with a 3 car garage, excellent schools in a great neighborhood.  Seller’s looking for a flexible Buyer who can provide a rent back

http://alanwangrealty.com/IDX/Scaletta-Lane-and-Josslyn-Drive-San-Jose-CA-95120/2224387841/0005610

End Unit Townhouse in Morgan Hill

      Large End Unit Townhome at Creekside Village in Morgan Hill, oversized backyard, multiple amenities such as a clubhouse, pool, spa, sauna, exercise room, tennis courts, and children’s playground

http://alanwangrealty.com/IDX/Creekside-Circle-Morgan-Hill-CA-95037/2224397580/0005610

Sunnyvale Condominium Central Location

      Convenient Sunnyvale Condominium located in close proximity to Technology giants such as Apple, Linkedin and Google.  Quick access to highways and walkable to local park.  Attends Homestead High School.  Seller currently has a tenant in the property until August.  Contact us if you are interested in this opportunity

http://alanwangrealty.com/IDX/Corte-Madera-and-Ano-Nuevo-Sunnyvale-CA-94085/2224414317/0005610

2015 Silicon Valley Real Estate Year in Review

As we close out another great year for Bay Area real estate in the Silicon Valley, I wanted to take a moment to reflect upon 2015 and look onward to 2016.  It has been a more volatile year than previous years which makes our year end review much more detailed.

Looking Back to 2011

It was February 2011 when our market rebounded from the housing crisis.  Since then, home prices over the last 4 and a half years have aggressively pushed upward every year, with each home sold pushing over the sold price of the previous week through bidding wars.

2015 Hot Start

2015 started out with an absolute acceleration in home purchasing activity.  Buyers came in out in packs and multiple offers were abundant.  Winning offers were hundreds of thousands over list price and competition continued to heat up in all locations.  Due to the imbalance of low supply and high demand, homes sold in 1 week with double-digit number of Buyers and prices increased aggressively with every home sale.  Prime locations were San Francisco, San Mateo and Santa Clara Counties.  As the prices increased Buyers were forced to further locations such as Alameda and Contra Costa Counties and drove prices up in those areas as well.

Profile of the 2015 Buyer

In previous years, cash investors from abroad especially China were commonplace.  In 2015, the Chinese government sealed many of the loopholes that were being leveraged, which has made it very difficult to generate the cash outflow to the United States.  Those that were able to get cash into the country and required a mortgage, the banks put another layer of restrictions on these funds requiring these funds to be in the United States in the Borrowers account for 2 to 3 months for what is called a “seasoning period” in order to combat money laundering.  The 2015 Buyer was more of the local Technology employees, many utilizing their stock options or restricted stock units towards their down payments.

Summer Cool Down Fall Slow Down

As summer approached the market began to cool as more inventory hit the market and Buyers’ were on hold due to high prices and summer holidays.  For the first time Seller’s noticed that their homes were not selling in a week, many took 30 or more days to sell.  This was a major adjustment as we were all used to 7 days being the average time a home would be on the market with multiple aggressive offers.  For those homes that had multiple offers, the prices were not as aggressive.  During this time period the Chinese stock market took a plunge and caused a panic in the US market as well, causing Buyers to further delay their home purchases.  The fall was also slower as days on market increased and Buyers were still sparse during this period of time.

Winter Rebound

Winter inventory shrunk to low levels as is typical of the season.  With this lower supply, homes some homes actually generated multiple offers at times depending on location while other continued with longer days on the market.

Trending in 2015

The most recent trend is that more and more companies are being founded and headquartered in San Francisco, which has driven home and rental prices up sharply.  The Peninsula continues to be a popular midpoint between San Francisco especially for dual income families where one spouse is at a startup in San Francisco while the other works for established companies such as Facebook, Google, Apple and Linkedin in the Southbay.  The other hot spots are in the San Jose Berryessa and Milpitas neighborhoods due to the fact that BART (Bay Area Rapid Transit) train line (http://www.vta.org/bart/timeline) is being extended to these destinations targeted for 2018.  These are also neighborhoods that are still quite affordable some with decent elementary schools.  As all of these neighborhoods have increased in pricing, more have opted for further commutes to Pleasanton, Dublin, Danville and San Ramon for better schools and great communities often sacrificing commute.

Areas with great school districts such as Palo Alto, Los Altos, Cupertino, Mountain View, Sunnyvale, Millbrae, San Carlos, Belmont continue to be strong markets due to their top school rankings, convenient locations and low supply.

Looking Onto 2016

2016 was looking to be the year of leveling home prices given the slowdown from the summer months.  One would argue that home prices have been on the rise for 4 and a half years and due for a slow down.  Also the Federal Reserve is planning to raise interest rates imminently.  This will not immediately affect mortgage rates, but will eventually increase the rate of borrowing though likely just by a quarter percent.  The concern is partially psychological as Buyers often experience remorse by not getting the lowest rates, but from a practical standpoint it could also increase their monthly payments where they were already pushing their budgets to purchase.  The major wild card is that the technology sector continues to demonstrate growth.  There appears to be no slowdown in the hiring by the Technology giants in the area, which means a basic supply and demand problem that will keep rents high and create more Buyer interest for sparse real estate.  Also there are potential IPO’s coming from companies such as Airbnb, Pinterest, Snapchat, Palantir and Cloudera which will flood more liquidity into the real estate market.  2016 could be another year of price growth.

Thank You for Your Referrals!

We wanted to thank you for your support and referrals.  We are so pleased that the vision we set out 12 years ago to create a new customer centric partner Agent has resonated so well with you, your families, friends and colleagues.  We are firm believers that real estate is a business of relationships where we are your resource for a lifetime.  We tune our craft to ensure that we are the industry experts with the experience, knowledge and innovation necessary to ensure that you have the highest quality Agent working on your behalf and not trying to sell you but partner with you to achieve your real estate goals.  Without each and every one of you we would not have achieved being the third ranked team in the region for Keller Williams.

Join the Conversation on Linkedin! - https://www.linkedin.com/pulse/2015-silicon-valley-real-estate-year-review-alan-wang 

We wish your family a safe holiday season and a Happy New Year!

Regards,

Alan Wang Realty Group

Photo Source http://www.avascent.com/2015/01/defense-industry-could-benefit-as-liaison-between-silicon-valley-and-dod/

Silicon Valley Real Estate Cools Down September 2015 Update

Join the conversation on Linkedin https://www.linkedin.com/pulse/silicon-valley-real-estate-cool-down-september-2015-alan-wang

Since February of 2012 we have experienced an accelerated Seller’s market with the most aggressive Buyer activity-taking place from January through May of 2015.  Inventory has been extremely low throughout this period and Buyer demand was at all time highs driven by the potential of rising interest rates.

Hottest Markets

The San Francisco market leads the pack with their surging growth of startups and uniqueness of city living, this market continues to be resilient.  The next market are Southbay Prime Locations near established technology companies such as Google, Facebook and Linkedin.  The Peninsula emerged as the newest mid-point between San Francisco and Southbay jobs as often a family will have one spouse in each location.  As prices soared in these highly coveted locations, Buyers expanded their searches further south.  Eventually prices continued to push higher and out priced Buyers moved to the East Bay and pushed prices up in those areas as well.

Summer Real Estate Activity

In June and July the market showed signs of a cool down, namely less quantity of offers yet offers were still of high quality as a remnant of Buyers were still searching from the hotter months.  Inventory levels rose as they typically do in the summer months.  As we progressed, the market continued to slow further.  Bidding wars had exhausted Buyers as many were priced out and re-focused their attention on vacations and summer activities; Buyer demand subsequently dropped.

In August, Buyer’s were rattled by volatility in the stock market mainly from a shaky China market and speculation on the Federal Reserve’s possible increase in interest rates.  Until that moment we saw enormous growth and solid returns in the stock market.  Especially in the Silicon Valley where Buyers’ down payments are directly correlated to the value of stock options and restricted stock units, this caused many to put a hold on their purchase plans.  Offers dropped to single digits, and on some homes no offers came at all.   The typical home that sold in a week started to sit two to even four weeks.

In September, the Federal Reserve decided to hold interest rates steady.  Even though the US economy economic indicators have been improving and our overall health is pointing in a positive direction, we are also a major player in the global economy.  Countries such as China and Europe continue to struggle and that ultimately affects our economy as well.  The interest rate hold should have been good news overall, yet surprisingly the uncertainty on timing has sent a chill through financial markets.  There is speculation that the rates will still increase this year and that speculation is causing nervousness amongst investors.  Once the rates do go up, this will directly affect interest rates on variable rates and equity lines that fluctuate with the prime rate.  More importantly, already out priced Buyers will see their mortgages increase which will further put pressure on affordability.  It is the psychology of Buyers that is worrisome, as many will feel that they did not catch the lowest rates.  Yet in the grand scheme of things, this is still the lowest interest rate we have ever seen even if it is a quarter point higher.

Looking forward to October there are some major regulatory changes coming to the lending industry.  This is called TILA-RESPA Integrated Disclosures.  In short a new disclosure will be provided for Buyers with some built in delays on various parts of the loan process.  Banks are anticipating some pains in complying with this new system that could slow down loan processing from October onward.  This could further dampen the market by literally slowing things down close times.

Seller Sentiments

This shift was especially tough for Sellers, as we have come to expect homes to sell in short periods of time and for prices grossly over list price in most areas.  For those on the market it was a tough adjustment to make as prices were coming in either at the last comparable and some even slightly under the last sold prices.  However, to focus on the short term would be short sighted.  Looking at the bigger picture as we passed three and a half years of aggressive price gains, Sellers are still able to capitalize on these enormous gains.  If you are a Seller there is a short window left to sell this year.  I would recommend taking your gains now if you are positioned to do so.

Buyer Opportunity

If you are one of those Buyers who became frustrated with this aggressive market, currently there is a window of opportunity for you.  The market is in a state of flux and Buyers are not as aggressive as they have been.  Buyers are offering at the last comparable sold price and often slightly lower.  The number of competitors has come down to a handful or none at all.  Sellers are nervous so it provides a nice opportunity for you as a Buyer to not have to go as aggressive on pricing and possibly reserve some contingency times where we have been unable to do so during times of fierce competition.  Those of you who had lower down payments, your offer might considered if you are the only offer on the table.  As a side note, rest assured that a great home in a great location will still sell quickly and with multiple offers.

In Closing

The market is cooling down but there is no free-fall at this juncture.  We anticipate that prices will level slowly over the next few years barring any major events in our economy or global events.  This is likely the first year in a long time that seasonality will actually come into effect.  In a normal market, the winter is typically a slower time due to the holidays.   This aggressive Buyer behavior was never sustainable and it would be refreshing to have some sense of normalcy and shift towards equilibrium in the marketplace.

July Market Update and New and Upcoming Listings

We hope that you and your family are having a wonderful summer and had an excellent 4th of July weekend!  July 4th is always a time to reflect on this wonderful nation that we live in.  The key take away is that because of the freedom that we have, we are blessed with endless opportunity to pursue our dreams.  So in as long as we work hard and keep ourselves focused towards our dreams, the possibilities are endless.  We are thankful for a country that enables us.

Market Shift in Progress

Buyers we know it has been a frustrating time over the last 3 years and even more frustrating in 2015 as competition accelerated.  We are pleased to announce that in the month of June, we have observed a slowdown in the Silicon Valley real estate market in certain pockets.  Now before you get too excited this does not mean that we immediately start offering $100,000 under the list price.  The market has slowed down as far as the amount of offers coming in are fewer and competition is less though many are still high in quality, prices are selling towards their previous high but not going over those previous baselines.  We have been seeing that homes in the $2M range have been initiating price drops which is unheard of in the last 3 years.  We have also been noticing homes in and around the $1M mark have also seen less activity as well.  New home builders once very confident are seeing homes left after a Saturday release where as there are typically camp outs and long wait lists.  Homes under $1M especially those under $600,000 continue to see a flurry of activity likely due to their affordable price points.

There are a few explanations for this slowdown.  The first is just the seasonality of summer, Sellers tend to sell in the summer, thereby flooding the market with more supply and creating more competition, while Buyers are taking time off to travel and occupied with the hustle and bustle of summer camps and time with kids they are taking a break as well.  The second possibility is that this is the beginning of a longer slowdown that will cause prices to level rather than their aggressive week to week increases as they have been over the last 3 and a half years.  This was always un-sustainable in our opinion.  Also on our minds is the Federal Reserves increase of interest rate which maybe coming end of this year.  It is too early to tell, but we will continue to monitor and provide an update as we see more as to which direction that this maybe trending.  Tied in with the first possibility of the summer slowdown is that the market picks back up in the fall which is possible as well.

Buyer and Seller Advice

We don’t know how long this slow down will last, but if you have been looking to buy it maybe a good time to re-enter as competition is less and we maybe able to get some below list offers accepted or at the least have less competition.  If you are a Seller likely you are pleased with your price gains.  It maybe a good time to exit as this market has been going on for some time and the question is did we just pass the peak?  We can't see into the future,  but we know the gains that you can take off the table right now.  Contact us for your personal analysis on your specific market.

New Listings

We are excited to present 2 new listings in San Jose and some upcoming ones as well!  Both properties will have Open Houses this Weekend from 1:30PM to 4:30PM come join us!

• 53 Mirabelli Circle in San Jose – This is a lovely unit right in the heart of North San Jose.  Walking distance to Cisco, Samsung, @First shopping center, Levi’s Stadium and Great America is steps away.  Companies such as Flextronics, Polycom and Broadcom are within biking distance.  Top floor corner end unit, bright, updated move-in ready great location for a primary or investment home

• 1265 Sundown Lane in San Jose – So many of our clients dream about living in a Single Family Home with a yard space, yet so many are priced out of that dream.  We are pleased that 1265 Sundown Lane in San Jose is for that Buyer who does not want the hassle of updating a home and wants to just move right in.  Sundown has been meticulously maintained and updated with an open floorplan, updated cabinets, generous use of granite, laminate and bamboo hardwood.  Too many upgrades to list come by to take a look

Coming Soon!

Contact us if you’d like an early preview on any of these properties.

• 2284 Avila Avenue in Santa Clara – Is available off market.  Owner poured her heart and soul into this property raised ceilings, slate, quartz, refinished hardwood floors, new bathrooms, this home was taken down to the studs and re-done.  If you are interested let us know!

• San Jose Single Family Home – 3 Bedroom, 1 Bathroom, 1338 Square Feet on a large 9,533 square foot lot.  Large bonus room between the garage and kitchen (permits unknown).  Many upgrades done, updated cabinets and granite countertops and bathrooms, tiled floors.  Target List Price in the $600,000’s
• Santa Clara Condominium – 1 Bedroom 1 Bathroom Condominium in Santa Clara 716 square feet.  Great investment or a primary home to stop paying rent and have appreciation potential and tax benefits.  Target List Price in the high $400,000’s

Thank you for all your trust over the years!  Have a great rest of the summer!