Be it ever so humble, there's no place like home...
Anyone familiar with Silicon Valley Real Estate will know just how difficult it has been for buyers to find that home for the past two years. Recently Realtor.com named San Jose as the Fastest Moving Market in the United States. Buyers know only to well that Sellers have ruled the housing roost since the spring of 2013. Now, based on recent data from MLS Listings, there is evidence that the red hot Silicon Valley Real Estate market is beginning to show signs of change. Change that buyers should be aware of.
How did we get here...
Silicon Valley economy came roaring back from the great recession in 2012. In Spring 2013 the expanding local economy, coupled with low inventory levels and a pent up demand for housing, exploded into a strong Seller's Market. And it has shown little sign of slowing down, until now.
Earlier this year we came out of our holiday lull with a bang. March, April and May showed a strong drop in one of the key indicators of market direction; Average Days on Market. Buyers were again faced with multiple offers, writing contracts well above asking price and giving away valuable contingencies just to get the property. Any ideas that 2015 would be different than '13 & '14 were quickly put aside this past spring.
Shifting Market...
A couple of weeks ago, the MLS released activity statistics for June. Within a month, that same Average Days on Market jumped from 11 days in May, to 40 days in June! July numbers came in at an average of 23 days.Ask most sellers, agents and title reps and they will tell you that there is a different feel about current market activity that bears out this recent data.
Many homes are on the market longer, buyers seem more hesitant in writing offers and open house traffic is down. The typical listing cycle of putting up a For Sale sign, holding weekend open houses and receiving 2-5 offers on Monday, is now the exception, rather than the rule. Granted, there are individual homes out there in high demand neighborhoods that are still getting lots of activity and multiple offers. This is especially true if the property has the upgrades that a buyer with lots of money, but no time to upgrade is looking for. But the majority of buyers have a lot more time and choices than they did just a month ago.
Slowdown or downturn...
That is the million dollar question. Is this a seasonal and inevitable market pause, or is this the beginning of something more? With summer vacations, schools now beginning as early as first week of August, the market does experience a yearly increase of inventory at this time of the year. Or is there something else going on here? Could this be the start of a downturn in Silicon Valley Real Estate? Everyone knows that real estate markets and prices are cyclical. What goes up, must come down. With a two year plus accelerating real estate market behind it, is Silicon Valley ready for a market correction? After all, some key market statistics show a steeper rise in inventory and days on the market, than what occurred in '13 & '14.
Important question for buyers...
Buyers that have recently been priced out or outbid in the market now need to make a very important decision; Take advantage of this lull in the market and grab their new home while they can, or be patient and see where the market goes in the next few months. Trying to predict timing changes in market conditions is a very risky business. Get it wrong and it could cost you thousands of dollars, and opportunities in some neighborhoods in Silicon Valley.
A sure bet...
In any market, we can only know what has happened in the past, and what is occurring in the market today. A sure bet is to make your real estate decisions in the here and now. If you are a buyer in Silicon Valley, take advantage of the slowing market. No one knows where this market or economy will be in six months from now. If you want to sell, and buy in a different area of Silicon Valley, this slow down is the best opportunity to do so in the past few years. Reason being, is that the buy end is always the most important side because that will be your new home, and your future. Another sure bet is to bet on the location. The old real estate axiom to buy location, location, location also applies to the greater Silicon Valley area as well as it does to your immediate neighborhood. With great jobs, great weather and a livability factor off the charts, real estate continues to be a great long term buy and investment!
Practical ideas for Buyers... ACT NOW!
Ask your Realtor to set up Listing & Sold Alerts for any areas where you are interested in buying a home. It's quick, easy and is automated to the same MLS your Realtor uses. This will allow to to follow the market in a very specific neighborhood. Get yourself pre approved with a quality lender and know how much you can borrow, and how much monthly payment your are comfortable with. But by all means...TAKE ACTION NOW! None of us now what September will bring.
