What is Happening in the Silicon Valley Real Estate Market? 2014 Market Update
As a real estate agent in the Silicon Valley, I am always getting asked, “Chris, how is the market? How is it going to be next year, and the year after that?
To answer your question, 2014 has been a fantastic year for the Silicon Valley real estate market. There are a number of factors that contribute to this housing boom.
1- Overseas Investment
Many overseas buyers are bringing money into our area and investing in both residential and commercial real estate. A large number of these investors are coming from the Pacific Rim, especially China.
The Chinese economy is starting to falter, but a number of the wealthiest Chinese actually made their fortunes in real estate. So they are cashing out in China because they see a fall coming in their market, and are trying to move money out as quickly as they can.
Meanwhile, the government keeps on enacting reforms to keep them from moving their money — so there is a tug-of-war happening between the government and the wealthy. Creativity being what it is, money from China continues to infiltrate our market. This foreign money is purchasing real estate, especially in Palo Alto, surrounding communities and the ones that are well-known internationally like: Atherton, Woodside, Hillsborough, Los Altos, Los Altos Hills, San Francisco and even as far south as Saratoga.
2- Stock Market
Another factor that has been driving our market for the last few years is the stock market, stock valuation and liquidity events; thats the benefit from an IPO (Initial Public Offering) an acquisition, or some liquifying of stock asset. In many cases liquifying of stock assets become cash. Furthermore, some recent IPO–before those shares are available for sale on the open market- find that companies may buy those shares at a discount of their perceived value, and offer cash in return. Often times people use this money to buy houses, in some cases really amazing houses.
We’ve seen our price points move by as much as 25% a year in certain areas. In Woodside for example, the median increase has been within 10% – 15% for the last few years. We have had a couple of really noteworthy sales. Last year there was a home on Mountain Home Rd. which sold for $117,500,000. That was the most expensive home sold in the United States at that point. Now it is #4, and has been beaten by two homes in LA and the Copper Beach Resort in Cape Cod. One of the houses in LA hasn’t sold yet, it’s just currently on the market at $195,000,000.
We also have mid-tier homes, which are between the $5,000,000,000 – $15,000,000,000 price point. The more “mainstream” homes tend to be between $2,000,000,000 – $5,000,000,000, and are moving along very aggressively. Many people are buying within this price point, and there is much more demand than supply.
Then there are the entry level homes which are under $2,000,000,000. These homes are for those of us who have jobs, work for a living, and don’t have a huge stock fund bolstering us. People in that price point are looking for access to the premium markets and premium locations. This is why we have seen a lot of movement in the Glens and Emerald Hills of Woodside, and of course Palo Alto and Woodside.
To learn more about the Silicon Valley real estate market, and for predictions on the 2015 housing market contact: