2017 marked another strong year in the Silicon Valley real estate market and 2018 promises to continue to break records. Understanding the trends helps create strategies to win in today’s market. Here are our five top trends for 2018 for the local housing market:
1. Sales to list price continued to rise throughout the year as opposed to peaking in June
In the 2015 and 2016 the percentage over asking price started to rise about February then peaked around May or June. July to the end of the year tended to settle down until the end of the year. 2017 broke that trend and continued to rise to a record 109.5% of asking price that peaked in December. Until inventory changes, there is a expectation that this trend will continue through the next quarter.
2. Available homes for sales continues to fall to record lows
Since 2012, inventory of available homes has gradually fallen at about 10% to 15% per year but beginning July of 2017 inventory levels dramatically dropped to 50% levels as compared to last year. This has been a drastic challenge for locating properties for buyers. Even though the inventory is down, the amount of pending sales are only down less than 10% meaning that properties are coming on and off the market quicker. Every 10 days it is a new market.
3. Median sales price continued to rise to the end of the year as opposed to peaking in the summer
Traditionally buyers of larger homes try to purchase prior to the summer so they can get the kids all set up for school. Due to the challenge in inventory we are finding that timing a move around the school year is proving more difficult. In 2017, larger homes continued to sell throughout the year. Median sales price normally peaks in the summer, but 2017, it peaked in December.
4. Migration of lower paying jobs to other states
More and more families making under $100,000 to $150,000 have chased the allure of lower cost of living of other states. Top areas are Texas, Seattle and Florida. California has lost more residents to other states than those who have moved here. However, our population has increased due to out of country families relocating here bringing higher paying jobs. California is now the most populous states in the Union with over 39 million residents.
5. Employment is still high and growing
Real estate values are fueled by jobs and the health of the economy. With the unemployment rate of 3.3% and a median income of $102,340 for Santa Clara County, the real estate market will continue to keep pace with the success of the economy. According to a new Zillow report released this week, San Jose is the slated to be the hottest market in the nation during 2018, and a big part of that is the abundance of good paying jobs.
Real estate continues to be a great vehicle for wealth building. It is alway wise to consult professionals to determine a strategy that works for you and your family. Contact us if you would like to discuss buying or selling in 2018!