Realty One Group
Silicon Valley, CA
This area encompass Palo Alto, CA. It is known for its excellent schools and Stanford University and birth of Silicon Valley. With many recent high technology like HP, Quora, Tesla and start-ups. The homes are close to high technology job centers and public schools are exceptionally good.
Palo Alto in relation to Santa Clara County
Single Family homes: 3 br+, 2 bath+ (1300-2000 sf)
Total listings SFH = 45
Inventory: 0.8 month (2.5 month is healthy)
Sold/Asked=101.4% was higher until 2015
Marketing time=19 days
$2.413 M (Apr-June 2016) $2.395 M (1 yr ago) +0.8%
$1,418/sf $1,468sf -3.4%
Since 2014 the teens (+17% and +10% price increase) enjoyed during 2013 through 2015 have come to a crawl. Prior to 2013 it was from no gain to +11% price increase. The home price appreciation rate is awsome. The old timers did not pay as much a few decades ago.
Consider this, if one wants a "typical" home bought at $2.5M with 20% down payment at 3.75% mortgage interest the monthly PITI is over $8,500. The minimum required annual income for the 80% mortgage is over $344,000. That does not include car payment, credit cards payments or any other loans. Applicants need to have $500,000 savings in the bank for the down payment. It is hardly attainable even with a dual income family. I have seen a mortgage as high as $6,000,000 and almost all have mortgages are $1 M and up. The cash buyer are not as often these days as previous years and are often from Pacific Rim for children schooling.
Historical avg sold home prices in Palo Alto (1300-2000 sf)
We are having a fantastic real estate boom since last quarter of 2011. It has been over 5.5 years. After this summer, if the local economy can not support the momentum required, the home prices can stall or slide slightly. But Palo Alto area is always desirable as many new companies CEOs live in the area who will not consider relocate to a cheaper location.
This may not be a bad thing as the neighborhood home prices are overheated too long. $1,400 per square feet is a very challenging level. Not long ago the most expensive areal cost was on top of Victoria Peak in Hong Kong and parts of London. Below shows the historical real estate market momentum using 1 year moving average. Note that it has tapered off somewhat since 2015 third quarter. If interest rates or employment changes we can expect it go lower affecting home value. The market momentum seems to suggest there is a down swing that the market can not sustain at this level.
Palo Alto SF Home price momentum
West Silicon Valley homes Q1 2016 (West Silicon Valley Home Prices)
Silicon Valley West side homes (2016 quarter 1 West side Silicon Valley home)
Shueh, Sam (Sam Shueh Blogs)
Shueh, Sam (Sam Shueh Realtor website)
I've called San Francisco South Bay home for over 30 years. We love this area and all it has to offer, and I enjoy sharing what I know about homes. I documented in several books about Silicon Valley history. I have much expertise in real estate...please give me a call. ( Four-O-Eight) 425-1601 Sam Shueh Realtor site