I have been thinking out loud about what the impact of rising rates in response to inflation would do to Silicon Valley's Real Estate market since April when the rates rapidly rose at an unprecedented pace to above 5%. But due to the nature of how we measure the real estate market and the built in delays, we could not really get a real sense of what was happening outside of the anecdotal evidence. Realtors talking to each other and getting feedback from each other and what they and their clients were experiencing out there is how many in the business gather information. Unfortunately, that is not the perfect way to gauge the marketplace, nor is looking at data from 30 days ago. Like many things in life, there is no universal method by which everyone agrees is the best way. Everyone has their own opinions about how to gauge a change. Here is my approach to gathering data as close to real time as possible given the tools that are available to me as I explain in the video.
The combination of inflation, rising rates, war in Ukraine and dip in Tech stocks is having an impact on Silicon Valley's Real Estate Market right now. This is certain. We are starting to see something we have not seen in a very long time: price reductions in significant numbers.
This may be the beginning of a change in the marketplace to normalization: where the buyer's market and seller's market are more aligned. The data shows that the market is still absorbing new inventory at a rapid pace, but just not as fast as before and not for all properties. Now the listing agents will have to earn their fees and focusing on marketing and other tools in their arsenal to make their listings stand out. Because data shows not everything is being sold as soon as they hit the market.
We need to keep watching to establish a trend. Real Estate is a slow moving industry, so looking for trends take some time. Come back on the first and second Tuesdays of each month to study Silicon Valley's Real Estate Market Conditions. We can explore the changes in the marketplace together. If you want to drill down to more granular levels, we can explore that next time.
The above is a long video, so if you don't have time to watch the entire thing and just want to see the data for what interests you, here is the breakdown of data by city.