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Silicon Valley Real Estate Market Trends

Trends in real estate throughout Silicon Valley indicate one of the country's hottest property markets

Silicon Valley real estate market trends over the past few years have shown high demand in area of low supply. The tech boom that only continues to grow brings prospective homebuyers and renters from across the globe. This article will examine recent Silicon Valley real estate market trends. It will also delve into the specifics of some of its acclaimed neighborhoods.

Over the last few years, the prices of several homes in Silicon Valley have doubled. In August 2016, data from the National Association of realtors showed that Silicon Valley real estate prices hit a new record. The median price for a home exceeded $1,000,000 in the area around San Jose. This marks the first time this has happened in any metro area in the United States. The San Jose metro area still continues to be a market with some of the highest prices in the country.

Soaring Costs

There have been instances in which residents simply cannot keep up with the cost. In open letter announcing her resignation, Kate Downing, details why she and her family were forced to relocate out of Palo Alto. Despite her and her husband’s professional incomes, recent Silicon Valley real estate market trends mean the only possible way for her to own a home would be through co-ownership.

The Impact on Renters

Renters are feeling the strain of Silicon Valley real estate market trends too. In Mountain View, renters outnumber homeowners. A November 2016 vote resulted in an approval of rent control. The rent control will apply to the majority of multi-family units that were built prior to 1995. It means that there will be a limit of 2% to 5% max on annual rent increases. The exact amount will be related to the previous year’s change in inflation in the Bay Area.

Current Silicon Valley Real Estate Market Trends

So, why exactly is this happening? The explosion of international tech companies setting up headquarters in Silicon Valley has created a continuous draw to the area. But the inventory of actual properties for sale has been extremely low. With more people moving to the area each year, there simply aren’t enough properties to keep up with the high demand. Co-ownership is not entirely uncommon.

More Days on the Market

Many houses receive multiple offers and sell quickly. Despite several years that have seen a heated market, some areas within the Silicon Valley region have cooled off in recent months. Whether or not this happens is dependent on the location, condition of the home, and other factors. Larger, more expensive homes have experienced a greater number of days on the market over the past few years. This is typical for their size and price.

Rising Interest Rates

Economists predict that the Federal Reserve will raise interest rates three times over 2017. Many also anticipate that home loan interest rates will rise. These increased rates could result in a slow down in the housing market. As a result, Silicon Valley real estate market trends may feel the impact. In higher priced regions like Silicon Valley, higher interest rates mean that buyers will not have as much spending power. This can in turn lead to a lower demand for property purchases.

In Santa Clara county, during the first nine months of 2016, the number of single family homes and condos that sold fell by 10.1% year over year. Silicon Valley real estate market trends show that sales may continue to be a bit slower than in previous years until prices adjust, or until new properties are available on the market.

But what’s been happening in Silicon Valley’s many unique cities themselves? When we consider Silicon Valley real estate market trends, a few key places come into play. Five of these include Saratoga, Cupertino, Los Gatos, Sunnyvale and San Jose.

Find out what's happening in the booming Silicon Valley real estate market

Saratoga

In Saratoga, the median home price of a single-family, detached home as of last month was noted to be $2,250,000. The average sales price for this type of home hit $2,858,000. This average sales price has gone up by 14.6% year over year. For a condo or attached home in the area, the median price as well as the average sale price were the same at $985,000.

Trends in median single family real estate prices in the Silicon Valley real estate market 2017

Single-family residences experienced more active sales last month, with 11 properties selling in total compared to just 1 condo or detached home. (This also explains the same dollar amount for both average sales price and median home price for condos). This condo experienced just 3 days on the market, compared to an average of 59 days on the market for the single-family residences that sold. It’s not entirely surprising, though. The winter season is, generally speaking, a less active time for property sales compared to the spring or summer months.

Cupertino

Cupertino single-family homes saw a median home price of $2,000,000 in January 2017. The average sales price was $2,130,540, which represents a 16.4% year over year increase, a 1.8% higher rate than found in nearby Saratoga. Cupertino single-family residences sold for 104.6% more than the original listing price. A total of 13 homes were sold last month with an average of 33 days on the market – substantially less than Saratoga’s 59 day average in the same timespan.

Days on the market trends for real estate in Silicon Valley 2017

Tech behemoth Apple’s Cupertino headquarters could potentially be a cause for increased desirability and price points of the area. Condos and attached homes also include noticeably higher price points than Saratoga, but with fewer being sold than single-family residences. January 2017 saw 5 condos or attached homes sold in Cupertino. The median home price was $1,200,000, with an average sales price of $1,270,400. These homes saw an average of 40 days on the market.

Days on the market trends for condo real estate in Silicon Valley 2017

The average and median prices for condos and attached homes in Cupertino were noticeably higher than in Saratoga. But the price points of single-family residences in Saratoga were higher than those in Cupertino. This suggests a higher demand for smaller homes, perhaps for a single occupant or professional couple, in Cupertino. In Saratoga, however, there is more of a demand for family homes.

Los Gatos

This past January, the median price for a single family, detached home in Los Gatos hit $1,520,000, with an average sales price of $1,685,100. A total of 22 detached homes were sold over the course of the month. This is noticeably more than the number of single-family homes that sold in either Saratoga or Cupertino in the same time frame.

Trends in average sales price for single family real estate in the Silicon Valley real estate market 2017

Los Gatos is a desirable, family neighborhood with a number of good schools. Many real estate agents mention being close to it as a selling point for buyers looking for homes in other areas nearby.

The family friendly feel of Los Gatos is also apparent in the numbers from the past month. Significantly more single-family homes sold than condos and attached homes. A total of 7 condos and attached homes sold in January, with a median home price of $980,000 and an average sales price of $876,857. These numbers are both lower than the previous month’s equivalent. Compare that to the previous month for single-family residences. January’s prices were either very close to or higher than December’s. It is even more evident that Los Gatos is a desirable location for families in particular when reviewing Silicon Valley real estate market trends.

Sunnyvale

In Sunnyvale, the median home price for single family homes in January was $1,400,00, with an average sales price of $1,420,580. That’s an 9.8% increase in average sales price year over year. While worth noting, isn’t as high as areas such as Saratoga and Cupertino. A total of 19 single-family homes sold in Sunnyvale last month, and the average number of days on the market was 20 – the fewest number of days on the market for single family homes when compared to Saratoga, Cupertino and Los Gatos.

The number of condos and attached homes that sold in Sunnyvale is fairly close to the number of single-family residences that sold. A total of 15 condos and townhomes sold in Sunnyvale last month, resulting in a median home price of $801,000 and an average sales price of $952,652. The average number of days on the market for condos and attached homes was 14.

Trends in median condo real estate prices in the Silicon Valley real estate market 2017

San Jose

San Jose encompasses a wide area in the region. It consists of several prominent neighborhoods that have an impact on Silicon Valley real estate trends. Some of these neighborhoods include Almaden Valley, Willow Glen, Cambrian Park, Evergreen, Rose Garden and West San Jose.

In San Jose overall, single-family homes had a median sales price of $850,000 and average sales price of $954,424 during the month of January. A total of 265 homes ended up selling, which could be largely due to the high number of desirable neighborhoods within San Jose’s borders. The average number of days on the market for these homes during the month of January was 34.

The median home price hit $555,000 with an average sales price of $587,778.

Trends in average sales price for condo real estate in the Silicon Valley real estate market 2017

Many condos and attached homes sold in the area as well, with 137 total sales last month.

Of the five areas examined in Silicon Valley, purchase trends indicate that San Jose saw the majority of condos and attached homes for sale in January's real estate market.

The Future of Silicon Valley Real Estate Market Trends

Silicon Valley real estate market trends are likely to slow down. With interest rates set to rise, many homes may increasingly become further out of prospective buyers’ budgets. This means that now may be a good time to sell. If you’re considering putting your property on the market, a home sale calculator makes it easy to find out what you could net on the sale.

Encompassing a large area that includes many cities and neighborhoods with some of the most expensive properties in the entire country, Silicon Valley real estate market trends will be worth watching as we continue into 2017.

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Silicon Valley Real Estate Market Trends
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Silicon Valley Real Estate Market Trends
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Silicon Valley real estate market trends have shown a recent cool down after years of a heated market. This article looks into some key data points for five of Silicon Valley’s noteworthy neighborhoods.
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