Silicon Valley's housing market maintained strong momentum throughout 2017 and finished the fourth quarter with the same vigor. Nevertheless, home sales have been constrained by anemic inventory conditions, which have continually declined on a year-over-year basis, for an average monthly decrease of 27 percent.
Inventory in Silicon Valley is dropping at the fastest rate in the Bay Area, and as a result, home sales were down by 6 percent from last year’s fourth quarter. Persistent buyer demand drove median home prices steadily higher, and the region posted annual appreciation of more than 20 percent, with substantial gains in Palo Alto, Los Altos, and Los Altos Hills. December's year-over-year median price gain was especially strong, as buyers rushed to lock in some housing benefits in advance of tax changes and may have feared more aggressive increases in mortgage interest rates. The combination of strong demand and depleted inventory makes Silicon Valley's housing market one of the most competitive in the Bay Area, with homes quickly finding a willing buyer.
Looking Forward: A severe shortage of homes for sale will ensure that pressure on home prices persists in the coming quarters, while strong economic fundamentals are expected to help boost homebuyer demand.
Let me know if you would like to discuss the local dynamics further and how it relates to your property. For realtime market update per city, click this link: Silicon Valley Market Update - Realtime
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. Please let me know if you would like to discuss the local dynamics further and how it relates to your property.