The Local Lowdown
Quick Take:
- Silicon Valley seems to have broken its growth streak that we’ve seen for nearly two years.
- Inventories continue to build, as they reach new two-year highs.
- Although inventories are building, single-family homes are not staying on the market for very long.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
The growth streak has officially been broken
We’ve mentioned it quite a few times over the past few months, but for nearly two years, median sale prices for single-family homes in Silicon Valley seemed to only increase. However, this month, we saw some softness in the market, as median sale prices decreased by 1.65% on a year-over-year basis in Santa Cruz County, and 10.46% in San Mateo County. However, it’s worth noting that homes have not given back any of their value in Santa Clara County, which saw median sale prices increase by 3.99% on a year-over-year basis. In the condo market, we saw even more drastic declines, as median sale prices decreased on a year-over-year basis by 14.88% in San Mateo County, 3.19% in Santa Clara County, and 9.71% in Santa Cruz County.
Inventory buildup shows no sign of stopping
In the month of May, we saw both the single-family and condo markets set new two-year records in terms of the number of active listings on the market. Single-family home inventories jumped by 21.65% on a year-over-year basis, and condo inventories jumped by 34.80%. Although slightly more new listings were added when compared to last year, there were drastically fewer sold listings. In fact, the condo market saw 22.82% fewer listings sell than this time last year, while the single-family market saw 13.01% fewer listings sell. This very well may be due to the uncertainty surrounding the trade war in April, due to the fact that it takes a few weeks for a listing to formally “sell”.
A huge opportunity in the condo market
Although single-family homes are within their long-term average in terms of the amount of time they are spending on the market, the average condo is spending a tremendous amount of time on the market, with condos spending 46.15%, 111.11%, and 146.15% more days on the market on a year-over-year basis in Santa Clara, Santa Cruz, and San Mateo Counties, respectively. When you combine this with increased levels of inventory, buyers might be able to find some incredibly motivated sellers, and purchase a great property for an even better price!
Silicon Valley is slowly becoming a buyers’ market
When determining whether a market is a buyers’ market or a sellers’ market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a sellers’ market, whereas markets with more than three months of MSI are considered buyers’ markets.
Silicon Valley has largely become a buyers’ market at this point in time. When we look at the condo market, there are 4 months’ worth of supply on the market in San Mateo County, 3.3 months in Santa Clara County, and 5.8 months in Santa Cruz County, making them all buyers’ markets. However, turning to the single-family home market, only Santa Cruz County is a sellers’ market, with 4.3 months worth of supply available. San Mateo and Santa Clara Counties are both sellers’ markets, with 2 and 1.7 months’ worth of supply on the market, respectively.
