Silicon Valley remains one of the more upscale addresses in the Bay Area, primarily due to the booming economy and abundance of job opportunities in the said region. However, even with the rosy economic outlook here, market experts are beginning to see a slowdown in the monumental climb of home values in Bay Area counties.
Time to relax, recoup
Since the resurgence from the economic fallout in the early part of the millennium, median home values in the Bay Area have climbed by as much as 6% year-on-year for the past 10 years. Add to that the inventory that finds it difficult to keep up with the rising demand for housing.
And as of 2018, the steaming-hot real estate market activity in Silicon Valley and the rest of the Bay Area was seen to have eased down. Not that a crash is happening any time soon for the real estate market here. Observers are not yet able to predict if this will be a trend in the coming years or if this is a temporary setback. But they were quick to say that after that aggressive rise in previous years, this market is way past due a correction. So while everything evens out, we could be seeing more relaxed buying activity in the near term.
Here are some of the finer details resulting to lower home values in this area:
Increase in housing inventory
Thanks to the ever-increasing demand for properties in Silicon Valley, developments and re-developments of properties here have been springing up every few months. And even if they aren’t newly built, there are other sellers to contend with.
Adding to the inventory are homes being sold even by long-time Silicon Valley residents. While property and commodity values continue to increase, it’s not quite the same for incomes of people primarily employed in tech firms here. Many of them opt to sell their properties and invest in ones they can better afford.
Comparable sales in the area
Following the more robust housing inventory, buyers now have more options to choose from and more chances of finding a price more amenable to their budget. So, if your area has houses selling at lower rates, chances are your home’s value may also be affected.
Mortgage interest rates
There are many factors behind the rise and fall of mortgage interest rates in a certain area. In fact, it must be noted that the Bay Area has seen a decline in mortgage rates in recent times. However, prices of properties here remain high and affordability comes into question. Then again, the recent federal decision to put a $10,000 cap in deductions for taxes on the state and local levels could impact the market and bring down home values. Shockwaves from this initiative are now beginning to be felt in the Bay Area.
Property and neighborhood conditions
Upgrading and improving your home’s amenities to a certain extent can increase its value. Go overboard with it and the opposite happens. Another factor is the conditions of surrounding properties and the neighborhood itself. External forces such as proximity or noisy businesses, neighbors, or highways may affect your home’s value negatively.
Consult with real estate professionals to better understand the value of your Silicon Valley home.
Give David Chung and Sunny Kim a call at 650.489.6251 or message us via davidandsunny(at)compass(dotted)com