Monday, January 2, 2017

2016 Silicon Valley Real Estate Year in Review


We hope that you and your family had a wonderful 2016.  It was certainly an eventful year for real estate and here is how the year unfolded and our outlook for 2017!

Year in Review

2016 was filled with highs and lows.  The Spring season started off red hot as lower inventory levels ushered in multiple Buyer offers across the board and strong sale prices for Sellers.  Average home prices hit their highest levels of all time in the Spring.

Summer inventory however spiked to its highest level since 2012 and prices leveled off to their 2015 price points.  This is where the market showed varied levels of performance with a tale of two markets.  Homes under and around the million dollar mark continued to sell quickly garnering multiple offers with above list price winning bids.  There was an especially heavy demand for Single Family Homes in this category.  There are very few neighborhoods left with a Single Family Home for less than a million dollars, Buyers found themselves heading further south or deeper into the East Bay for these homes.  Townhomes have been a property class that has performed very well over the last few years, but showed softness as their price points were hitting levels close to Single Family Homes in certain markets.  Homes in the $1.5M and up range struggled against more inventory in the summer and we saw longer days on market and canceled listings. 

As is traditional with the seasons, inventory levels dropped in the fall and winter.  Inventory continued to clear into the fall and more homes were sold, which continued into the winter months.  There have been a number of investor flipped homes this fall/winter as well as a continued strong demand throughout the year for multi-residential homes.  Demand remained steady this fall and winter overall.

Source: MLS Listings November 2016

Cash Inflows/Outflows from Abroad

Perhaps one of the major developments are the controls around cash inflows/outflows from abroad especially from China.  The crack down actually started back in January of 2015, but now both countries have shut down multiples avenues of cash inflows/outflows in order to prevent money laundering.  US Banks are scrutinizing downpayments heavily which are affecting loan qualifications.  In short, Buyers from this market have not been able to participate in real estate this year due to these constraints.  This equated to less competition and bidding activity especially in the upper end of the market.

Interest Rates

The other major development has been the rise of interest rates.  The Federal Reserve has raised rates by .25% this year and the .25% the year prior.  The year started off with excellent rates in the 3.5% to 3.75% range for a 30-year fixed and we are closing the year at 4.25%.  We have all been accustomed to extremely low interest rates for a very long time.  It is important to take a look at the historical chart of mortgage rates to demonstrate that interest rates are still at historical lows.  For those of you that have not locked in a mortgage, though you missed the absolute bottom, historically you will still do well if you locked in now.   Those of you that are on an Adjustable Mortgage Rate (ARM), you may consider switching to a 30 year fixed as the Federal Reserve is signaling additional increases of .75% in 2017.  It is highly likely that we may not see rates like these for quite some time.  This could be the year that multiple Buyers enter the market in an effort to take advantage of these historically low interest rates.

Source: Federal Reserve Bank of St Louis Economic Research, 30-Year Fixed Rate Mortgage Average in the United States©

US President Elect Donald Trump

Perhaps the biggest news of 2016 is that of President elect Donald Trump.  This is certainly an unpredictable presidency coming in 2017 as this is not our typical president.  The stock market seems to be signaling that he will be good for business and personal finances.  Real Estate is his primary industry and this alignment should be good for this sector as well.  There is much uncertainty on this front as the New Year unfolds.

Technology Microeconomy

Silicon Valley real estate is more of a primary home market rather than an investor centric one.  We continue to have heavy recruiting and hiring from top Technology firms in the area.  2016 saw more Mergers and Acquisitions (M&A) activity rather than much on the Initial Public Offerings (IPO’s) side.  This had an impact on housing as the lack of liquidity to Silicon Valley workers reduced Buyers abilities to garner large downpayments to purchase high priced real estate.  2017 could be the year where unicorns seek liquidity and ultimately fuel additional real estate purchases for Silicon Valley workers.

2017 Projections


Despite all of the changes in 2016, we are expecting another strong year for Silicon Valley real estate overall.  The higher price points maybe dependent on the performance of stocks and infusion of IPO’s that could possibly occur in 2017.  The big question for Sellers is how long can prices continue to climb as the last 7 years have continued to show price appreciation.  With interest rates rising, this has a direct impact on affordability.  For Buyers do you take advantage of still historically low rates and enter the market now or wait for a downturn that may or may not come in the short run?  Primary home buying is not always tied to finances as there many other reasons to purchase a home as well.  2017 looks to be another exciting year for Silicon Valley real estate.  We wish you and your family a Happy New Year and we stand ready to assist with your real estate needs!

Feeling Social?


Alan has been a Realtor in the Silicon Valley for over 13 years and in the technology industry for over 14 years. He is the Founder of the Alan Wang Realty Group within Keller Williams Realty. He is passionate about helping his clients understand the market direction in order for them to make the best possible strategic decisions on their real estate strategies and execution plans.


29 comments:

JesseHanson said...

Silicon valley real estete review looks great. This article had the best information on real estate anyone would love to know especially anyone from the same industry. thanks for sharing.

Alan Wang said...

Thank you for reading and the feedback!

Evelyn said...

Its a great pleasure reading your post.Its full of information I am looking for and I love to post a comment that. The content of your post is awesome Great work. https://www.myamericandreamhomes.com

Alice Gray said...

Thanks Alan for informative post. This is the fist time I read about Sillicon Valley real estate review. It really make sense.
Reference:
HOMEiA.com - Find Top Real Estate Agents in Minnesota
Top Rochester MN Real Estate Agents

Erik Maurer said...

Very interesting blog. Alot of blogs I see these days don't really provide anything that I'm interested in, but I'm most definately interested in this one. Just thought that I would post and let you know. Eateries Along Beach Road

Elizabeth J. Neal said...

It is a great website.. The Design looks very good.. Keep working like that!. Bartley Secondary School

Elizabeth said...

The information you provide to create a lot of work
I liked a lot of interesting content.
Thank you
https://www.webuyhousesfastfair.com/

Max said...

This web site is really a walk-through for all of the info you wanted about this and didn?t know who to ask. Glimpse here, and you?ll definitely discover it.
www.downloaddrasticdsemulatorapk.com

mtom said...

I’ve recently started a blog, and the information you provide on this web site has helped me greatly. Thank you for all of your time & work. TrainingroomSG.com

Silke Fisher said...

Thank you for taking the time to publish this information very useful! Realtors White Rock

Silke Fisher said...

Find top realtors in your city or town that go the extra mile and advertise in all the top spots. Our Real Estate Brokers use an inside platform to connect buyers and sellers through Agents in our system. We have lists of developers, builders. And do lan assembly packages to get the best value for your home or property. When only the finest Realtor will do to work with your most valuable asset then look no further than our hand picked Real Estate Brokers list. If you want more info click here link : Real Estate Brokers

Mark weins said...

Nice post. I understand something very complicated on distinct blogs everyday. It will always be stimulating to see content from other writers and rehearse a specific thing at their store. I’d prefer to use some together with the content in my small weblog whether you don’t mind. Natually I’ll provide a link on the internet weblog. Many thanks sharing. Boulevard 88 Condo

Laura Bush said...

For a long time me & my friend were searching for informative blogs, but now I am in the right place guys, you have made a room in my heart. Properties for sale in Moraira

Anonymous said...

Very good brief article! I actually valued often the looking through. I hope to read simple things much more away from you. I’m sure you got amazing perception and also plans. I will be incredibly amazed utilizing ths important information. gym

Ali jan said...

A boat trip on the Danube in Budapest is equivalent to a mini sight-seeing tour. The river presents a breathtaking view of beautiful old buildings, incredible architecture; lots of history. budapest rental

kenwood said...

There are online stores providing consultation for various needs, all you need to do is to visit their websites or call them and ask for suggestions on your specific requirement. There are many such stores in Melbourne, Sydney, and Brisbane where bunk beds are very popular. bed with slide

Roy Cracia said...

It's a valuable article that you had shared. You have clearly explained the market updates, interest rates factor, and other important considerations. The real estate market can have many ups and downs and it's your call when you can take advantage of the market changes. A real estate agent can help you find the best house for you without putting you in any trouble of finding a home. If you are looking for the best Real Estate in Winnipeg then go for Element Realty Inc.

nency said...

Your website is really cool and this is a great inspiring article. Thank you so much. muabannhadat hanoi

Jeff L. Ventura said...

Because real estate prices have dropped quite a bit, the potential commissions that real estate agents and brokers could earn have also dropped. real estate agent connecticut

shane lee said...

Before you plan to buy a truck mattress for your vehicle, measure the space available on the truck bed where you would be putting the new mattress. semi truck mattress

Petey Cruiser said...

Thanks for the blog post buddy! Keep them coming... Real Estate Appraisal Markham

Anonymous said...

Amazing knowledge and I like to share this kind of information with my friends and hope they like it they why I do immobilienmakler mülheim

Dwayne said...

I should thank you for posting this blog because the subject is trendy today and everybody needs to find out about it. The article is fascinating and it might be valuable for the individuals.Edmonton Real Estate Brokerage

Tino Best said...

Are you looking to find the best deal on Moving Services Moving Near Me

kevin calain said...

I am attracted by the info which you have provided in the above post. It is genuinely good and beneficial info for us. Continue posting, Thank you. professional real estate agent in toronto canada

benstoke said...

The media is currently full of real estate 'doom and gloom' - real estate repossessions and arrears are up and real estate prices are down ... its almost as if the CROWN INN APARTMENTS 'sky is about to fall'! This situation has seen many real estate developers, and property investors generally, leave the market - and for those thinking of starting out in real estate development, these are scary times indeed.

SEO Expert said...

Eine große Anzahl von Hausbesitzern im ganzen Land ist daran interessiert, ihre Häuser zu verkaufen. Wenn Sie eine dieser Personen sind und in oder in der Nähe von Los Angeles leben, haben Sie eine Reihe von Möglichkeiten. Die von Hausbesitzern am häufigsten gewählte Option ist die professionelle Unterstützung. Diese Unterstützung kommt oft von einem immobilienmakler in meiner nähe .

nice man said...

If you need to sell your cash for houses fast, for whatever reason, there are a few ways to do it. It all depends on your situation, how much equity you need to get out of your house, and how flexible you are with the terms of the sale. Here are the top 3 ways to sell your house fast, in any market:

OliverJohnson said...

Rising prices of real estate have make buying an house almost impossible, however choosing the right interior can make your small space feels big. avail vybe interior discount code and get amazing deals on quality interior decoration.