I've just studied the latest Intero report on the state of the Silicon Valley real estate market in June.
There are absolutely no signs of a cooling off in the sellers' market we're currently seeing.
Indeed, more and more sellers are recognizing the incredible opportunities at the moment. With the exception of San Francisco, listings were up throughout the Bay Area last month.
Closer to home, Silicon Valley saw a 10% rise in the number of available homes for sale, compared with May. Given the low inventory environment we've been in for some time, this is an extremely significant growth in supply.
Perhaps related to more choice suddenly hitting the market, we did see a 2.9% month-on-month drop in average sale prices. Nonetheless the longer term year-on-year trend was up by 3.2%, indicating that we are still seeing good price growth.
While some may point to the drop in prices in from May to June, it should also be remembered that many buyers will have been delaying their purchase as they have simply been unable to find the right home to match their needs. That would certainly help to explain the 1.5% rise in overall property sales in Silicon Valley during May.
With a better supply of homes, there is likely to be a price correction from the situation we've been in for some time of many buyers chasing too few homes. What happens now will be very interesting. Is the current increase in inventory the indication of a new, sustainable trend, or is it merely another temporary blip? This will go a long way to deciding what shape we're in, moving forward.
At the moment, however, there is still great buyer confidence, boosted by a strong local job market and mortgage rates currently at near record lows. This means that we're still seeing multiple offers over asking prices and the likelihood is that the trend will continue at least until the end of the summer.
We will then start to move into the pre-election period when uncertainty over future government policies, whatever the new administration will be, may start to be a bigger factor in the market as we move into the fall. Counterbalancing that, however, it's likely that low interest rates will be with us until the end of the year, so the feel good factor for buyers is likely to stay intact.
Better inventory levels could also boost the market overall, in that wider awareness of more choice for buyers could be a very motivational aspect in the fall.
So it seems that we're poised at a fascinating moment for our local real estate scene. The only certainty is that sellers really should be taking advantage of such positive buyer sentiment, before anything changes, so please don't hesitate to contact us today to discuss how to make the most of a great opportunity.