By David Goll
It may have been an exceptionally hot summer, but the Silicon Valley housing market experienced a brief chill during the month of July. It began to warm up again by August, but hasn’t returned as yet to its red-hot state of late spring and early summer.
Median and average single-family home prices, as well as overall home sales, in Santa Clara County were off a bit in July compared to June. Median prices slipped 3.5 percent from $1 million in June to $965,000 in July. In August, the median price recovered slightly to more than $967,400.
Average home sale prices decreased more substantially, down 6.7 percent from just over $1.3 million in June to $1,225,200 a month later. Home sales were also down, but only slightly, from 1,096 in June to 1,089 in July, with total inventory also dropping a bit. The following month, though, the average price of a single-family home in Santa Clara County had ticked back up to $1,252,710.
Median single-family home prices during August ranged from $614,500 in Gilroy to $3.4 million in Los Altos Hills.
The statistics are from the Real Estate Market Trends Report, compiled by veteran Palm Desert real estate agent Rick Campbell. “I would describe it as a bit of a cooling off in the market,” said Craig Gorman, president of the Santa Clara County Association of Realtors and REALTOR for Intero Real Estate Services.
“Depending on the location, we are still seeing multiple offers but not as many as earlier in the year. Sellers this summer who got three offers for their homes might have gotten 12 to 15 a few months earlier.”
Condominium and town home prices and sales countywide also cooled off during July. Median prices lost 2.5 percent value in July compared to June—from $651,000 to $635,000—while the average sale price slipped from nearly $717,000 to $696,000. Overall sales were down 4.2 percent. By August, the median condo price slipped further to $615,000, with the average sale price decreasing to $684,000.
In some Silicon Valley cities, homes are still drawing lots of offers, though they tend to be in the pricey northern and western portions of the valley—Palo Alto, Mountain View, Los Altos, Cupertino, Los Gatos and affluent San Jose districts, among other communities, Gorman said. Offers are being made less often in more modest neighborhoods in San Jose and the south county cities of Morgan Hill and Gilroy, he added.
But the small shiver in the market is all relative, given its gaudy gains from a year earlier. From July 2014 to this past July, median home prices in Santa Clara County appreciated more than 12 percent, from $860,000 to $965,000. The average home sale price was up more than 10 percent from just over $1.1 million in July of last year to $1,225,200 during midsummer 2015.
Rental housing provides no refuge from Silicon Valley’s expensive for-sale market. Median rent for a one-bedroom apartment in San Jose cost $2,230 in August—up nearly 15 percent from a year earlier, but flat compared to July. The median rent for a one-bedroom unit in Sunnyvale increased nearly 9 percent over the past year to $2,340, which is a 2.6 percent increase from the month before. Pricey Palo Alto actually recorded a small drop in rents from the preceding month and year, with a current median rent of $2,480 for a one-bedroom apartment. But that rent level was relatively affordable compared to San Francisco, where a median one-bedroom unit rent has soared to $3,500.
For renters looking to get into the housing market, some local realtors advise they shouldn’t regard the small price decrease as a long-term trend. Jeff Hansen, broker in the Campbell office of Keller Williams Realty, said in Santa Clara County, homes are selling at more than 105 percent of asking prices. That ranges from an average of about 98 percent of asking prices in Morgan Hill and Gilroy to more than 114 percent over the asking price in Palo Alto.
Hansen said he sees buyer interest waning a bit in recent months, though that trend is more pronounced in less-affluent communities. He said the only thing that could create a more significant slowdown in the Silicon Valley market would be an increase in interest rates for homebuyer loans.
“Interest rates have been so low for so long,” he said “At some point, they have to rise. Of course, that won’t be much of an issue at the high end of the market. It will have a bigger affect on first-time buyers.”
Arvin Paredes, broker associate for Keller Williams Realty, said he has detected a “bit of exhaustion and weariness” recently on the part of some prospective homebuyers in a highly competitive market with a decided lack of housing inventory. But he echoes Hansen’s overall optimism for a housing market unlike any other nationwide.
“You might have occasional slowdowns, especially in certain seasons, but there are so many jobs being created in Silicon Valley,” he said. “A recruiter at Apple told me 100 new employees start there every Monday. So, as long as they can afford housing here, and as long as the overall tech sector stays strong, this market will never really slow down.”