Interested in seeing the distribution of home prices across Silicon Valley?

The chart below shows the number of Closed Sales for single family residences by price range and by city. First note that there was virtually no single family residence under $500k. Most homes are in the $500k to $2.0M price range, then tapers-off. The San Jose-Cambrian area had the largest number of home sales under $1.0M.

The median price for single family residences rose by a little over 2X since 2000. Our current up-market cycle started in 2012 with the median price rising by 68%.

A view of the monthly ebb and flow suggests that prices jump in the early part of the year, then settle at a new plateau for the remainder of the year. I suspect this is due to the early listings setting the list price based on prior sales from six months prior.

The outlook is for prices to continue rising. You can see that homes have been selling for 6% over list price, which is similar to last year (7%), however, significantly lower than 2014-15.

The supply of new listings is dramatically lower. There are around 6,000 new listings per year for single family residences in Silicon Valley compared to ~8,000 during the financial crisis, ~9,500 immediately before and after the Internet bubble, then crash. This alone can fuel our levels of price appreciation.

Market demand continues at all-time highs. Silicon Valley homes have been selling faster than anytime over the past 15 years. The slight up-tick in 2016 might be an indication that rising prices are starting to impact demand. However, the monthly average in the first few months of 2017 suggest otherwise.

My expectation is that the more expensive areas will not appreciate at quite the same pace as the more affordable areas. I do expect prices to continue rising across the board for the foreseeable future.

Let me know if you have a suggestion for additional research.


Silicon Valley Homes: 1Q2017 Market Update
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