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Photo of Mary Pope-Handy, crystal ball, Mary's logo and the words "Mary's Predictions" - Silicon Valley real estate market predictions

Last year I made some Silicon Valley real estate market predictions. At the time, we were oblivious to COVID-19 or what would ensue because of it.  Even so, some of the real estate predictions ended up being accurate, despite the “dumpster fire” of a year that it was with a once-in-a-century global pandemic.

Quick prediction points:

  • Inventory remains excessively low, demand high, prices will continue rising in 2021
  • The situation is fueled by COVID, working from home, and low interest rates
  • Part of the challenge is that buyers who are moving up or downsizing are keeping their prior home as a rental (not selling it)
  • Some seniors may be more open to selling after April 1st, when they can more easily move their property tax basis within all of California

Filling in the details on what we expect in 2021

As with last year, I want to focus on Santa Clara County in particular (home to San Jose for those reading this from afar). While San Mateo County is also part of Silicon Valley, there are fewer than half as many sales there each month (often about 40% as many).

Let’s start with last year’s predictions, how accurate were they?

Mary Pope-Handy’s Silicon Valley real estate market predictions for 2020 (as of 1-2-2020):

  1. Early 2020 (winter through spring, or most of it?) will continue to have low inventory and strong absorption
  2. Multiple offers will be common, particularly in areas with good commutes, good schools, etc (the usual pattern)
  3. Overbids and non-contingent offers will be common (buyers had a bit of a breather from summer until early fall and had been able to write in contingencies in many areas)
  4. Prices will appreciate and may rise to the heights of May 2018 again.

How’d I do? Actually all four of those did happen, despite having a giant BREAK in the market between March 2020 and June 2020. First we could not show any homes, then only vacant ones, but finally in early May all homes could be shown as long as rules for COVID safety were followed. May was still hesitant but by June the home buying public was all in. Nearly all Realtors (myself included) were working at or beyond capacity from June until October or November as buyers strove to get out of smaller homes and into larger places, preferably with yards. We had another fall “breather” in October leading up to the election, but that didn’t last long. Multiple offers and some crazy overbids are happening again in many places in the valley. Recently I heard of massive overbids in Los Gatos  (about 50% over list price), Saratoga (more than 10%) and Cupertino (more than 25%) for particular properties.

Home prices are up double digits from a year ago. The average sales prices hit in 2020 were higher than those in 2018. The median sale price in the 2nd half of 2020 was clearly higher than those same months in 2018 or any other year.

Mary Pope-Handy’s Silicon Valley real estate market predictions for 2021:

  1. With ongoing crucially low inventory, there’s a good chance that prices will rise another 5-10% for single family homes in 2021. This will be even more likely if interest rates remain low and the stock market overly exuberant. A lot of wealth here in the Bay Area is tied to stock holdings.
  2. Condos and townhomes may be less desirable now and during the worst of COVID (and have lost some value in the last year), and may lose value in the short haul, but as prices for houses move out of reach, the condominium and townhouse market will likely become the next hot spot of the market. For the first half of the year, the majority of condos are likely to lose value, possibly making it a good time to buy a condo, but rise after the Spring market (when single family homes move further out of reach). That has often been the pattern.
  3. Early 2021: buyers aren’t going to wait for the Spring market, but will jump on inventory as soon as it becomes available. I was showing property on January 2nd.
  4. Multiple offers will remain common, particularly in areas with good commutes, good schools, or some feature with enduring value, such as architectural charm.
  5. Overbids and non-contingent offers may be the norm for much of the market. Non contingent may become more typical even without multiple offers.
  6. The second half of 2021 should bring relief from the Coronavirus, but also a loosening of tax regulations for senior home sellers with Proposition 19 going into effect as of April1st. It may be that some seniors will then be willing to sell and relocate to other parts of California. If there’s a significant increase in listings, we may see more balance come to the market. It would need to be a large influx of listings to change the present dynamics, but any increase in the number of homes to buy will help.
  7. Once this pandemic is in the rear view mirror, having a larger home, or being further from commute locations may not be as much of a driver as it is now. Will tech workers be able to continue living in resort areas while working for companies in Silicon Valley? We don’t know. The resort markets have been white-hot, too – but if 2 years from now people cannot actually live in Tahoe and work in Mountain View, there could be a trend reversal.

The driver of this white hot market is inventory. For those interested in more than just my predictions, please keep reading – here’s some more info on the housing inventory in Silicon Valley and its history.

Supply – inventory of available listings on the market

The starting point for my Silicon Valley real estate market predictions is understanding where we are now as much as possible. That begins with inventory patterns. We have had ultra low inventory for years, but even since 2013 there have been ups and downs.

Most of the time, inventory hits a low point in December or January of each year, then it shoots up between January or February to sometime in late spring. Sometimes it extends further.  Often, inventory is highest in summer, but sales don’t keep pace, and consequently prices tend to level off or even fall during summer and later in the years. These aren’t absolutes, but they are trends we see in many years.

Below please find a graph indicating the inventory or supply of houses / single family homes for sale in Santa Clara County dating back to January 2003.

I like this kind of graph because visually, we can see the annually repeating low points, but also, we can identify when the  oversupply  kicked in – the number of homes on the market ballooned during the downturn! After that, inventory began to shrink, and aside from the fairly normal mostly seasonal patterns, has been on a decline ever since.  (The second half of 2017 and first half of 2018 were an aberration.) The MLS only permitted me to create this graph from 2006 to now – not sure why, but it cannot cope with a 20 year graph.

Graph of inventory 2006-2020


December 2017 is quite low – it is the lowest inventory of any month in those years with a mere 487 houses for sale – and we know what happened during that period, prices shot up to a new high point by May 2018. The 2nd lowest December is 2020.

Next, the same info but in tables for all of 2001 – 2020.  The MLS won’t go back further than 2004 as of today, but I had some data from prior years, so compiled a 20 year view:


Chart of Available Inventory 2001 - 2020 SCC SFH - click to view larger


What we know is this: very low inventory sets the stage for multiple offers and overbids, which in turn leads to appreciation.

What about interest rates?

Loans are a product one buys and it’s a huge part of the home buying formula for most of us. We tend to say “I got a loan”, but it’s something you select and purchase, and something you’ll pay for over years.  The people and companies which sell loans, like everyone in real estate sales, feel the pinch when the housing market has only a few closings each month. With fewer listings, there are fewer sales, meaning fewer dollars flowing to banks, lenders, loan officers (and yes, Realtors).

Back to supply and demand, if there’s less demand for loans due to low numbers of sales, it puts downward pressure on loan pricing. Low inventory means low sales, and that tends to foster low interest rates.  The government has been running a higher deficit to help get us through the current pandemic and economic crisis, and it would be very hard on Uncle Sam if rates rise much. My sense is that interest rates will stay low until both the housing market has more sales and the economy can recover. That may be awhile.



  • Silicon Valley Realtor, selling homes in Los Gatos, Saratoga, San Jose, Silicon Valley, and nearby since 1993. Prolific blogger with a network of sites.