Summer is over and the kids are back at school. This time of the year is normally considered the slow down-period for the real estate industry. Real estate industry is a cyclical business which goes through the same cycle year by year. So we are bound to see some changes in the marketplace at this time of the year.
The big question right now for people who are in the market for real estate seems to be whether a cooling down period or a new trend is happening in Silicon Valley. After a remarkably robust rise in sales activity since 2012, most neighborhoods saw some sort of slowing down of sales activities after June of this year.
What does the data tell us?
From a year-over-year perspective, the market is still doing well and prices are still into double digits. However, since June of this year, Santa Clara County has seen a slight drop in prices, coupled with an increase of listing volume. Price dropping and inventory increasing can only mean the market is cooling.
This certainly is what I am experiencing with my listings. What used to draw 5-6 offers are now drawing 1-2 offers and they are taking longer to sell than previous periods. The buyers are a bit more cautious and taking longer time to make decisions. And in listening to my peers in our sales meetings, this scenario seems to be repeating in many areas of Santa Clara County.
It seems, at least in the short term, buyers are experiencing some breathing room where they are not competing in the cut-throat environment which had become so commonplace. They have more time to perform their due diligence and seem to be taking full advantage.
The sellers are now seeing that homes are not automatically receiving multiple offers and flying off the shelves. Great houses in the best neighborhoods will still attract a lot of interest and will continue to do well as we still have a shortage of housing inventory. However, for the typical home, good marketing and great presentation of their homes is of paramount importance now. Just throwing it out there without adequate preparation seems to be a recipe for disaster. Buyers have more choices with the increase of inventory.
Sellers have to do more market research and price homes correctly and be willing to prepare for longer days on market or even price reductions if the listings were priced with unrealistic expectations.
As this is cooling is just starting to take place, it will take a some time for the market to fully adjust, but a new trend seems to be forming here in Silicon Valley.