Friday, February 7, 2020 / by Matt Cossell
The hyper competitive Silicon Valley housing market is red hot with buyer’s fighting it out with multiple offer bidding wars and staggering sale prices!
Los Gatos, February 6, 2020 – Matt Cossell top producing agent at Keller Williams Los Gatos and serving Silicon Valley announced today a dramatic shift in the housing market and a return to bidding wars and rising home prices.
After a lack luster 2019 real estate market the tide has turned. The market is heating up driven by super low inventory, record low interest rates, and a high-flying stock market. The real estate market in Silicon Valley has been on a roll since 2012. Prices have been moving consistently higher and it has been a seller’s market with multiple offers for many years. The market slowed in the summer of 2018 and everyone has been wondering if this was the end of the epic run. Although prices in Santa Clara County have held their value over all some pockets have seen moderate price drops. The County as a whole has seen longer days on market, less multiple offer bidding wars, and homes selling closer to listing prices since the summer of 2018.
This slowing seems to be coming to an end. All signs are pointing to a red hot seller’s market in 2020 and prices could be on the raise again. One of the major contributing factors is a super low inventory of homes for sale. Home prices are generally driven by supply and demand and the current market supply is at record low levels. As of February 6, 2020, 596 single family homes are for sale in Santa Clara County compared to 1,229 homes at the same time last year, 1,080 in 2015, and 3,730 in 2010. That is a 44.8% drop in home inventory year over year. Inventory has not been this low in February since before they started tracking mls statistics. With inventory this low home buying demand doesn’t even need to increase to create a buying frenzy. Home buyers are finding themselves with very few homes to choose from and the homes that are available are getting multiple offers and selling for $50,000, $100,000, or even $2000,000 over the listing price.
A standard 3 bedroom, 2 bathroom home with 1,241 Square Feet in the Cambrian area of San Jose listed for $1,248,000 just sold for $1,550,000 with over 10 offers. That is 21% over the asking price and a staggering $1,249 per square foot. This trend is consistent in most parts of Silicon Valley. On average homes in Santa Clara County are selling for 102.1% of the asking price. This number has been rising steadily since October 2019. Some of the more desirable markets like Los Gatos are seeing even larger spikes in prices and bidding wars. So far this month homes are selling for 105.2% of the asking price in Los Gatos compared to 101.5% at the same time last year. Just last week a home in Los Gatos that sat on the market with little interest in the summer of 2019 sold after just 2 days on the market with multiple offers and $100,000 over the hefty $2.7 million dollar price tag.
Interest rates are contributing to the madness with mortgage rates at record low levels buyers are able to pay more for a house without increasing the monthly payment. Buyers with good credit are able to secure a 30-year fixed interest rate at or below 3.5%. That is roughly a full point lower than interest rates at the same time last year. Lower interest rates increase buyer's purchasing power by allow them to qualify for a larger loan amount with the same payment. A buyer who would have qualified for a $2,000,000 loan a year ago with a 4.5% interest rate could now qualify for a $2,250,00 loan with a 3.5% rate and have the same payment. This is a difference of $250,000 on the purchase price of the house and buyers are taking advantage of the savings.
The stock market is at all-time record high levels. Most analyst would agree that the market is being led by the technology sector. This has a huge impact on the housing market nationwide but an even larger impact on housing in Silicon Valley. The region serves as the global center for high technology, innovation, and social media. The housing market is closely tied to the health of the technology companies that employ a large percentage of the workforce. With Apple, Netflix, Google, Facebook, Adobe, Salesforce, and thousands of other tech companies all headquartered in the Silicon Valley the tie between technology and housing is unmistakable. When technology companies are doing well, hiring and the stock prices are rising the housing market tends to benefit. Currently technology companies are hiring and one of the biggest challenges is finding enough talented employees. As a result, they are looking out of State and out of County to find employees with the skills required for the jobs. This has led to a large influx of workers with high paying job coming into the Silicon Valley from out of State and from other Countries. All these workers need housing and with a large portion of company compensation coming in the form of stock and bonuses tied to the stock these tech workers find themselves able to purchase a house in the Silicon Valley.
With the Spring selling season just around the corner the real estate market in the Silicon Valley is red hot! With multiple factors at work we are likely to see a very strong real estate market with bidding wars and rising home values. To stay up to date on the latest trends in the real estate market go to MattCossell.com, or fb.com/mattcossellteam or contact Matt direct at 408-761-3271.
Matt Cossell at Keller Williams Los Gatos is a top producing Realtor with a track record for serving his clients at an extremely high level. He leverages technology to expand the marketing reach, increase demand and drive his client's home sale price to the highest possible level. Matt is equally dedicated to serving his buying clients by providing up to date market knowledge, expanding the selection of homes by leveraging technology and relationships to find and secure the perfect home for his clients. Matt can be reached at 408-761-3271 or Matt@MattCossellTeam.com.
By Matt Cossell
Top 1% Realtor in Santa Clara County