Silicon Valley, bolstered by soaring tech stocks in 2017, fueled luxury home sales and price growth in the Bay Area last year, according to market data out this week.
“Proximity to the heart of the high-tech boom has been one of the major factors in recent appreciation rates,” wrote Patrick Carlisle, chief market analyst for Paragon Real Estate Group, in a report Wednesday.
San Francisco saw record prices, with single-family homes hitting a median price of $1.415 million and median condo prices reaching $1.15 million in 2017. But Silicon Valley, which spans Santa Clara and San Mateo counties, saw prices soar last year; these counties now house the bulk of the Bay Area’s luxury housing stock.
“Though San Francisco is a major player in luxury home sales, Silicon Valley—Santa Clara and San Mateo Counties together—has over 3.5 times as many homes selling for $2 million and above,” Mr. Carlisle wrote in the report.
In Santa Clara, the median single-family home price jumped 15.8% in 2017 to $1.175 million. In San Mateo, the median single-family home sold for $1.418 million—a 9.2% increase, according to a separate report from Golden Gate Sotheby’s International Realty on Wednesday.
In Palo Alto—home to Facebook, Tesla and Hewlett-Packard—the median price soared 15.7% in 2017 to $2.95 million. In neighboring Mountain View, home to Google, the median price increased 14.8% to $1.98 million. And in Apple’s home of Cupertino, the median price hit $2.1 million, an annual bump of 11.8%, according to the Sotheby’s report.
A lack of inventory has translated to quick sales in the Bay Area. The average home in San Francisco and Silicon Valley was sold in one month or less.
That was particularly true for Silicon Valley’s budding condo market. Last year, the average Santa Clara condo sold in only 17 days, and in San Mateo, it took on average 22 days, according to Sotheby’s report.
But gains won in the housing market due to the thriving tech industry are vulnerable to market volatility seen in the past week.
The Dow Jones Industrial Average fell more than 1,000 on Thursday as fear over rising interest rates continued to rock financial markets.
“Financial market volatility can have a chilling effect on real estate markets, especially at the high-end, since the affluent are generally much more invested in, and sensitive to, financial markets,” wrote Mr. Carlisle, of Paragon, before the market tumult that started a week ago.
Volatility in the financial markets would be particularly bad for startups—with which the Bay Area is replete.
“If investor and venture capitalist confidence suddenly collapses due to national or international events, as has occurred in the past, it will have adverse effects on currently unprofitable startups with negative cash flows and insufficient reserves,” Mr. Carlisle said.
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