The reSolve Group| Palo Alto

MARKET UPDATEES

Q1 2018: THE SILICON VALLEY MARKET AT A GLANCE

PALO ALTO

SILICON VALLEY MARKET OVERVIEW

From Pacific Union International Chief Economist Selma Hepp – April 13, 2018

The high end of the housing market got off to an incredibly strong start in Silicon Valley during the first quarter, with sales of homes priced above $3 million surging by more than 70 percent when compared with last year’s first quarter. Homes priced below $1 million declined at a rapid pace, but all other price segments showed strength.

At the same time, the region lost inventory at a faster rate than any other Bay Area region, leaving buyers with fewer options and stiffer competition. As a result, home prices surged in the first quarter with the median price jumping by nearly 20 percent year over year. Silicon Valley saw the second strongest median price growth in the Bay Area behind San Francisco.

Intensified buyer demand led to homes selling in less than a month across all price ranges, with roughly nine in 10 homes selling for more than asking price. Buyers were also more willing to pay premiums than they were last year, with homes selling for an average of about 7 percent more than original price.

Looking Forward: While a strong beginning to the year suggests another healthy spring season, inventory shortages will constrain sales and drive home prices higher. And while rising mortgage rates, tax reform, or volatility in the tech stock market have not shown any impacts on buyers, these factors could eventually lead to a pause in activity.

Defining Silicon Valley: Our real estate markets in the Silicon Valley region include the cities and towns of Atherton, Los Altos (excluding county area), Los Altos Hills, Menlo Park (excluding east of U.S. 101), Palo Alto, Portola Valley, and Woodside. Sales data in the charts includes all single-family homes in these communities.