A dire shortage of listings combined with the improving Silicon Valley economy and ever-lower interest rates is creating an intense seller’s market, which we have been experiencing since the first week in February, particularly in the high tech hotbeds of Cupertino, Mountain View, Sunnyvale, Palo Alto and nearby areas in both San Mateo and Santa Clara Counties. More demand than inventory fuels rising prices. How bad is it for buyers? Year to date, the median sales price is up a whopping 29% for single family homes in Santa Clara County.
While that statistic is pretty scary for buyers and just as exciting for sellers, it does not mean that all homes have increased in value by 29%. It does indicate strong appreciation. But also it points to more expensive homes selling now. For those of us active in the market on a daily, full time basic, it’s clear to see that both things are happening. How much have prices gone up? That varies by area, school district, price point, sale type and many other factors. Let’s get a quick view of the appreciation since the bottom of the market and also from the peak:
County wide, we have not yet recovered to the peak of the market (though it seems that in Cupertino they have already hit that peak pricing again for houses sold recently). Recovery is underway!
Individual markets are stronger or weaker than the average – let’s look at them next. These stats and graphs care of the RE Report, to which I have a subscription.
Please note that only 2 areas are under 100% for sales price to list price ratio. Palo Alto is at 106%!
And next, for condominiums and townhouses:
Prices may slip some months – part of this could be seasonal, as often sale prices are a little softer in fall than in spring. For that reason, the year over year stats are a better indicator of how homes are doing in terms of appreciation. (This may not comfort sellers who see any slippage in the median and average sales price as “money lost”.) Appreciation is almost never a straight line – instead it’s more like rolling hills where overall, they get bigger as you go along. In the graph belowk, which tracks numbers back to 2008, please see the regular peaks and valleys. Some of this is simply to be expected!
Sales volume is down, though, because inventory is down. What is listed and put on the market is getting gobbled up pretty fast overall. Please see the image below and note how steeply rising the pending sales have been going.
What does this mean to you if you’re a San Jose area home seller? If you do everything right (pre-sale work, staging, marketing, easy access, and appropriate price), your property should sell quickly. If you’re a home buyer, it means that if you waste a few months making lowball offers, you are hurting yourself because while you fool around, prices are going up. If you want to buy a home in this highly competitive market, you must write a strong offer, your very best, and do everything right for the opportunity to purchase a property, particularly if you will be in a multiple offer situation. The longer you wait, the less house you will end up getting, and worse, you risk being completely priced out of the market.
Want to read more on the South Bay market? Here’s my newsletter, with lots more info: