Now that the first half of 2017 is behind us, let’s see how the market is going as of June 2017.
Based on the data below, the real estate market continues to be robust. Buyers are paying top dollar for homes in the Los Altos, Los Altos Hills, Sunnyvale, and Mountain View communities. Since I believe in being ‘hyper-local’, I thought you’d like to see how different neighborhoods are performing within these specific communities on a Dollars Per Square Foot ($/sq ft) basis.
As you can see, there was a slight pause in the market in 2016. Prices didn’t really dip for the most part, but they just climbed more slowly. I don’t know if there is a strong correlation, but Apple stock dipped from about $125/share on 6/1/2015 to $95/share in 6/1/2016 and Buyers seemed a little hesitant to make aggressive offers. However, by the end of 2016, Apple stock recovered and the Buyers’ confidence came roaring back. Apple closed at $153/share on June 1, 2017 and the home prices are well above 2015 levels now.
How long can this last? I attended several presentations by credible economists in early 2017. All of their forecasts are all optimistic for at least the next 12 months. So far, their predictions are coming true. They believe that Silicon Valley continues to drive much of the growth in the global economy. The technology companies seem to be the driving force behind the real estate market as well. The local companies are growing. They are leasing, buying, or building most of the office space for their new employees. And, their employees need housing! This makes the demand for homes very high while the supply of good homes to buy remains scarce. The Law of Supply and Demand continues to prevail and is resulting in higher housing prices. I think this will be the prevailing trend for the near future.
What could cool the market and cause the next down cycle? It would take a massive and possibly global event to disrupt the current trends. The last such event was in 2008-9 (e.g. the Global Banking Meltdown). Markets always behave cyclically and there will be a downturn at some point. However, I’ve been living in the Bay Area for almost 50 years and I’ve seen our market and community bounce back from every down cycle.