Silicon Valley real estate: Home prices defy gravity — and sales increase, as they fall elsewhere in region

Real estate markets traditionally suffer from the summertime blahs — but Silicon Valley is not a normal market, particularly in Santa Clara County.

With the housing supply at historically low levels, the median price for a single square foot of residential property keeps rising in several Silicon Valley cities. In Los Altos, a square foot was worth $1,291 in August, up 4 percent from July. In Palo Alto, a square foot was worth $1,499, also up 4 percent; in Sunnyvale, $994, up 7.0 percent; and in Los Altos Hills, $1,412, again up 7 percent.

That’s a 7 percent increase in a single month, a dramatic surge.

Even more unusual is this: While sales have fallen across the Bay Area — largely as a result of the region’s tight housing supply — they have risen markedly in Santa Clara County.

A report issued this week by the CoreLogic real estate information service shows that July home sales were down across the nine-county region — but up 13.0 percent in Santa Clara County from the year before. That was despite the fact that the county’s inventory – the number of homes available for sale – was down about 30 percent from the same period in 2016.

Naturally, the median price of a single-family home is rising as buyers compete for the slim offerings. It was up 11 percent year-over-year in the county, where the median price of a single-family home stood at $1,097,000 in July.

“I haven’t heard anyone arguing that the market is cooling here,” said Alex Seroff, an agent with DeLeon Realty in Palo Alto. “Sellers are still emboldened and expect high prices, and buyers are still very motivated and willing to do what it takes to get houses.”

He rolled out additional numbers for the month of August, drawn from the Multiple Listing Service. (The median prices per square foot were also derived from the MLS.)

Active listings were down from the month before in five cities in the heart of Silicon Valley. They fell 45 percent in Sunnyvale; 28 percent in Los Altos; 24 percent in Palo Alto; and 16 percent in Mountain View (where the value of a square foot was flat, at $1,061). Los Altos Hills’ inventory increased 6 percent, though the statistical sample was tiny — the number of listings increased from 31 to 33.

“Inventory is now so low that trying to derive meaningful statistics is challenging,” Seroff conceded. “The sample sizes are so small.”

Even so, to see prices consistently rising month-over-month in the summertime is a bit startling for longtime market observers.

Looking at the same five cities, these were August’s median prices for a single-family home: Sunnyvale, up 3 percent month-over-month to $1.36 million; Mountain View, up 3 percent to $1.5 million; Palo Alto, up 3 percent to $2.67 million; Los Altos, up 3 percent to $2.87 million; and Los Altos Hills, up 1 percent to $3.95 million.

Now, how are home sales increasing in Santa Clara County?

Andrew LePage, a research analyst for CoreLogic, guessed why: “Buyers are burning through whatever inventory there is, really fast.”

And there is no shortage of buyers — many of them well-heeled — in Santa Clara County, where so many tech giants are located and jobs, generally, have lately been on the rebound.

Santa Clara County added 7,400 jobs during July, according to a report from the Employment Development Department. That was the strongest growth in the Bay Area, which added 21,000 jobs as a whole. It was the strongest month of hiring for the region this year – and for Santa Clara County.

“I’ve heard people say Silicon Valley is the 51st state,” said Mark Wong, an Alain Pinel agent in Saratoga. “We have our own culture and our own economy, and our housing prices defy gravity.”

Article source: http://www.mercurynews.com/2017/08/31/silicon-valley-real-estate-home-prices-defy-gravity-and-sales-increase-as-they-fall-elsewhere-in-region/

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