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A Shifting Real Estate Market

July 20 2018
July 20 2018
Blog Header_MidYearMarketUpdate

A Shifting Real Estate Market

What You Should Know about Silicon Valley’s unique real estate cycles.

Now that the dust has settled from spring's selling frenzy, we are starting to see some major shifts in the housing market.

After years of double-digit appreciation, average and median home prices are slowing down. Inventory of homes on market has increased over the past six weeks, as has the average days on market (the number of days a home is on the market before getting into contract).

Even though home prices have not fallen yet, we are finding open houses are less busy, price reductions are more common and homes simply aren’t getting the crazy competitive overbids that once characterized the Silicon Valley housing market. continue reading

Buyers no longer feel a sense of urgency or fear of "missing the market". Qualified buyers are still out there, intending and hoping to buy a home, but they are willing to wait for the right time and the right home, at the right price. And of course there are outside influences that affect buyers likelihood to purchase now or later - like interest rates, political climate, stock market and economic conditions.

For us, this means we're starting to have difficult conversations with clients, making sure to set proper expectations on pricing and what the selling process and timeline will look like.

But we’re not worried. The real estate market is cyclical -- there are natural ebbs and flows, booms and busts -- fed by supply and demand. As agents, part of our skill is learning to ride the waves, predict the next upcoming wave and coach clients according.

The real estate market typically moves through four phases. Those phases, as labeled in this Harvard Blog post, can be described as:

  • Phase 1: Recovery

  • Phase 2: Expansion

  • Phase 3: Hyper supply

  • Phase 4: Recession

The problem we see with this Harvard post is that they describe the “hyper supply” phase to be characterized by mass construction and building, where lots of new housing is built to satisfy buyer demand. In Silicon Valley, we simply don’t have sufficient land for this to happen, so supply has remained largely constant over the past several years despite increasing demand.

What's slowing the market down today is affordability.  A recent SIlicon Valley Business Journal article said in Silicon Valley more than half —  51.2 percent — of the median family income goes to making their house payment. With that said, Silicon Valley remains a great place to live, work and invest in real estate.


If you’re curious about how the shifting market conditions affect your home’s value and when you sell, we’re happy to offer a quick consult to help guide your decision making.


 Mid Year Market Update


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