Silicon Valley Housing Market 2018

Inventory

The number of active listings and the number of new listings have converged.  In previous years, the number of active listings have been a 4-5 times higher than the number of new listings.  Starting in 2013, however, we have been seeing a steady convergence of active and new listings, and just last year, these two numbers have converged.   

What does this all mean?  This means that homes have been selling faster than ever before even though inventory has stayed fairly consistent.   Everyone thinks that the market is really competitive right now because of a low inventory but really it is not due to a lack of supply but rather due to a high demand.

It used to be that homes would sit on the market for a very long time before they were sold.  In the recent years from 2013-2018, homes on market have been selling faster than ever.

Days on Market

The data on number of days on market confirms the speed sell of homes.  In 2008 the average single family homes in the Santa Clara County spent 39 days on the market.  Today Single Family Homes in Santa Clara County spend only 9 days on the market. Since 2012 the median number of days on the market has dropped by more than half.  

Silicon Valley Housing Sentiment Survey

Silicon Valley Housing Sentiment Survey

Happy February! As you may remember, during the holiday season the Property Nerds created the first Silicon Valley Housing Sentiment Survey. In it, we asked consumers what they thought about the trajectory of the economy, interest rates, and housing prices, specific to the Bay Area. The results were mixed – opinions were all over the map when asked about the strength of the local economy but one thing that all respondents agreed on is that mortgage rates had nowhere to go but up.

What we also found was that Bay Area residents are “bullish” about our housing prices. Why? The answers become clear in the data below.

For question 1, During the next 12 months what do you think will happen to housing prices?

It seems that most people think the Bay Area will continue its upward trend. 60.42% believe that housing prices will go up, 27.08% believe that housing prices will stay the same, and only 12.50% believe that housing prices will go down. We’d like to believe that we will have some more balance in the housing market in 2018 but Silicon Valley’s job growth and lack of housing is insulating us from the cyclical downturn that may start to happen in other areas in the country.

For question 2, What do you think will happen to interest rates in the next 12 months?

We found that 74.47% believe that interest rates will go up, 21.28% believe that they will stay the same, and 4.26% believe that they will go down.

Though we have seen a February adjustment in the stock market, we have already seen a steady uptick in interest rates in 2018. As long as the economy is growing, the fed will have no choice but to gradually increase the cost of borrowing money.

For question 3, What do you think will happen to the economy in the next 12 months?

This is where we received interesting results. Although most people think that housing prices and interest rates will rise, it seems that they are uncertain about how the economy as a whole will behave.

36.17% believe the economy will go up, 36.17% believe the economy will stay the same, and 27.66% believe the economy will go down. This reflects the uncertainty in our country right now. From the new tax policies to foreign policy to who will be in the White House at the end of 2018, this year looks to be a year of volatility and change.

So what is the word on the street on the “front lines” of real estate? We have heard complaints and concerns from our current and potential clients about how the new tax policies affect them, but we haven’t seen a concurrent ebb in the market, except in the luxury properties above $5 million. Will any of these factors help with our supply dilemma and encourage more people to sell their homes? And how will the new tax law affect the supply and demand of housing in the bay area in the long term? We look forward to our future blog posts that will go into depth about these questions from the Property Nerds!