February 2024 Silicon Valley Real Estate Update - Aggressive Bidding Wars are Back

As predicted in our 2023 year in review, imagine if the rates went down how competitive the market would be? 2024 answered this question and the answer is aggressive bidding wars. The market has kicked off on fire for Sellers. Rates dropped from half a percent to a full percent and Buyers are done delaying their home purchases. More Sellers are content with the lower rates and putting their homes out for sale than 2023, although it will be unlikely to be enough to satisfy demand. We expect 2024 to be a Sellers’ market.

Live Listing Case Studies

Here are some live case studies from our home sales this year.:

• 1166 Spencer, Mountain View, CA – 7 Offers, Sold $292,000,? 6.8% Over List Price
• 632 Spruce, Sunnyvale, CA – 20 Offers, Sold $617,000, 29.5% Over List Price
• 656 Giannini, Santa Clara, CA – 30 Offers, Sold Price - $2,450,000, $552,000, 29% Over List Price
• 921 Gridley, San Jose, CA – 14 Offers, Sold 20%+ Over List, Sale Pending
• 2426 Cory, San Jose, CA – 12 Offers, Sold Off Market 20%+ Over List, Sale Pending

Inflation Rates

Inflation rates rose slightly in December and dropped in January. We are seeing an uptick in February. With these 2 increases, the Federal is in no hurry to drop interest rates.

Mortgage Rates

Rates were in the upper 6% to over 7% in 2023, which forced many Sellers stay in their current homes. This year rates have dropped to the lower 6% range but still fluctuating. This drop was enough to get more Sellers to sell their homes this year and Buyers to come back into the market in droves.

NASDAQ Stock Index

The NASDAQ Stock Index which indicates the health of our technology companies is at an all-time high. We saw a 30% increase in 2023 and currently a 6.8% increase year to date. The majority of offers that I am reviewing are from employees at Google, Apple or Meta. The stock portfolios are the source of down payments for Silicon Valley home buyers.

Unemployment

A bit concerning is despite the stock values of technology companies at all-time highs, this has not stopped the sector from laying off and continuing hiring freezes. An issue to monitor is the unemployment rate. Traditionally at 4.5% to 4.6% in California, we are currently the rate at 5.1%. So far this is not high enough to cause any issues in the housing sector, but this is a datapoint to monitor. Despite layoffs all of last year, there were still a large number of layoffs in January of this year in the Technology sector.

Conclusion

This market is not for the faint of heart. Buyers who are your competition are armed with heavy down payments, at times cash and ready to win. Be ready to compete hard to win. The silver lining would be to try to win a home sooner rather than later, as prices are increasing every week. If you are looking to buy, you would be better off getting in and getting out and increase your equity further. Sellers you will find that the market will surprise you on pricing, but some of you will find it hard to resist the temptation to aim higher than the market is willing to pay at that moment in time. A point to note, eventually Buyers do get tired of bidding wars, so take advantage while you still can. We anticipate 2024 to continue to be an aggressive Sellers’ market for most of the year.