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Is the Silicon Valley Market About to Peak?

What is happening with Silicon Valley real estate in the early months of 2016? To find out, it’s important to look at what drives the industry, the economy, and jobs. Nationally, we’ve seen strong job growth, and here in Silicon Valley, it’s been amazing. Here’s what we’ve seen in the last year:

  • 55,000 jobs were created.
  • 34,000 people moved here.
  • 5,559 new permits were issued for construction.

As you can see, the amount of permits for construction falls well below the number of people who have moved to the Silicon Valley area. This has resulted in a shortage of 25,000 homes, which has only exacerbated our already low inventory. The result was the big run up in prices we’ve seen so far this year.

I'm expecting the Silicon Valley market to top either late this year or early next year.

If you want to know where the market is heading, it’s important to take at the five things that drive real estate:

  1. Sales: The number of sales in our area spiked in 2012 when the real estate market bottomed. We’ve seen a decreasing number of sales since then.
  2. Available inventory: The reason sales were so high in 2012 was that there were many homes available. The recession forced many homeowners to sell their homes, and many were scooped up cheaply through short sales and foreclosures. Since then, we’ve been hovering around 1.5 months of inventory, which is astonishingly low.
  3. Prices: As mentioned before, home prices bottomed out in 2012; the median price of a Silicon Valley home at that time was only $551,000. As the market recovered, home prices appreciated rapidly up until 2015, when the median homes price was all the way up to $845,000. That’s a 40% increase in housing prices in only three years, a number that is not sustainable in the long run.
  4. Interest rates: The reason prices have been able to run up is because interest rates have remained relatively low. However, now that the market has made a strong recovery, the Fed has announced their plans to start raising rates -- the only question is when. Most experts anticipate rates to increase throughout 2016 and into 2017.
  5. Affordability: Rising interest rates, of course, will negatively affect buying power. Back in 2013, 36% of first-time home buyers could afford to purchase a home. That number has decreased each year to the current number of only 16% affordability. Last time we saw this kind of decline, affordability dropped to 11% and the market topped.

So, what does all of this mean for 2016? First, I think that sales will continue at a steady pace (+2%); second, I predict prices to continue their rise (+7%) because of the low supply and high demand of homes; third, interest rates are going to continue to steadily rise through the 4% ranges; and lastly, I think that the rise in home prices is going to drop the affordability rate below 15%. I’m expecting the Silicon Valley market to top either late this year or early next year.

Historically, the US economy goes through seven-year cycles. Since the last market top was 2008, we’re due for another one. If you are a buyer, we highly advise against trying to time the market because the longer you wait, the higher interest rates are going to increase. Think of it this way: If the market dips by 10%, and interest rates only rise 1%, your monthly rates will be the same. In other words, if you’re ready to buy, there’s no reason to wait -- get in the market now while rates are low.

If you plan on selling, this year would be a great time to do so. Prices are on the rise and there is a massive shortage of homes in the Silicon Valley area. This demand doesn’t seem to be going anywhere, so we recommend selling your home before affordability drops and home prices peak.
If you would like additional advice, information, or real estate assistance of any kind, don’t hesitate to reach out to us. We’re always available to help you make a better life through real estate!

Join Our Client Concierge Club

Lately, many people have asked us for recommendations for an architect, contractor, designer, landscaper, and CPA. Of course, we know great professionals we can hook you up with. In fact, we have a particular resource better than Angie’s List, Craigslist, and Diamonds Certified,

Over the last eight years, we’ve curated a preferred vendor list for the surrounding Los Gatos area. We want to share this list with you. It’s easy! Just text BJREX to 38470. You’ll receive a link to download our Homekeepr, complete with the five-star vendor list.

Additionally, the app will connect you with our exclusive Client Concierge Club. It’s an amazing group reserved for our previous clients, friends, and family. It includes some fun events and giveaways throughout the year. Most importantly, it’ll offer you discounts on premium home goods and services from notable brands including Wayfair, Restoration Hardware, Sonos Audio, and Vivint Home Security.

The app will connect you with our Client Concierge Club.

As a token of our appreciation, we’ll send you a Client Concierge Club card preloaded with $5 Starbucks credit. This is our way to express our appreciation for your endorsements, referrals, and overall support. Don’t miss out on a free cup of coffee and more savings!

If you have a question about real estate in the surrounding Los Gatos area, give me a call or send me an email. I’d be happy to serve your local real estate needs!

The Power of Partnership

Today, we wanted to let you know about some great things that are happening in our business. Frank Herman has joined us here at Keller Williams in Los Gatos!

I've known Frank for a number of years. He's a very accomplished Realtor. Frank's an expert in investment real estate, and I'm an expert in marketing and negotiation. We looked at our two businesses and thought we could serve both of our clients at a higher level by teaming up.

You'll hear from both Frank and I in the coming months. This is only the beginning! We'll give you the latest real estate information through our video blog. If you have any questions, give us a call or send us an email. We look forward to hearing from you.

What Is the Best Time of Year to Sell Your Home?

With real estate prices peaking, many of you who are considering selling your home or moving up into a bigger one are asking “When is the best time to sell my home?” The answer to the question may surprise you.

If you’ve been waiting until the spring to list your home, you are going to want to take a look at these numbers. Redfin, the largest online real estate brokerage in the country, compiled two year’s worth of data across 19 metro markets and here is what the data says. Homes that are listed during the winter are:

  • 9% more likely to sell
  • Sell in an average of one week faster
  • Sell for 1.2% more money

This is contrary to conventional wisdom, which says that listing your home in the spring is the best time because of all the buyers that are out looking at that time of year. While it’s true that there aren’t as many buyers during the winter, the buyers that do shop in the winter are often more motivated and serious. 

The buyers out looking this time of year are what we call “life event buyers.” They are people that are buying because of job relocations, deaths in the family, or the birth of a new child, among other reasons. These are people who need to buy, as opposed to most buyers during the spring and summer months who just want to buy. If you can be flexible with your timing, listing around this time of year can be of great advantage to you. 

If you’re considering selling in 2016, you may want to consider advancing your timeline to take advantage of this prime time in the market. Interest rates are also going to rise this year, which may put a dampening effect on prices.

If you would like us to evaluate your personal situation, please reach out to us. We would be happy to do a complimentary consultation, as well as an equity analysis to see how much money you have in your property that you can take on to whatever your next chapter may be. 

If you have any other questions, don’t hesitate to give us a call. We will be right here, ready to help you create a better life through real estate.

Three Things to Keep in Mind When Selecting a Mover

Today, Scott Cramer from Ace Relocation joins us to discuss three things to look for when selecting a moving company.

  1. Pay attention to the mover's reputation. Do your research. Read customer reviews, and make sure everyone that you allow into your home is on the up and up.
  2. Make sure the company has workers' compensation insurance.This ensures that if someone gets injured on the job, the company will not sue the homeowners.
  3. The mover should care. You want them to care for the home and the goods they are moving.

With Ace Relocation, the home itself will be protected by rug and hardwood floor covers, and everything will be wrapped appropriately. Anything that's breakable will be covered first with cardboard, then pad-wrapped, and then shrink-wrapped.

That's why we recommend Scott Cramer and Ace Relocation to all of our clients. Ace Relocation is a great moving company. To contact Scott, call (408) 605-7412 or email SCramer@AceRelocation.com.

As always, if you have any questions for us, give us a call or send us an email. We'd be happy to help you.

Google & Apple Pushing Home Prices Higher

Today, I want to discuss how Google and Apple will push home prices higher this year and beyond.

The #1 drive of home appreciation is job growth. The precursor of job growth is the leasing of commercial office space; when big companies plan to hire more people, the first thing they do is go out and find more space. Recently, I spoke with Phil Maloney, the nation's top commercial leasing broker, and he shared some interesting facts:
  • Google has recently acquired 5 million square feet of new office space
  • Apple added 100,000 square feet of new office space per week in 2014
  • There will be a rough total of 10 million square feet of office space that will house 50,000-60,000 workers
To put these numbers in perspective: last year, Silicon Valley as a whole created around 42,000 jobs. With Google and Apple looking to add up to 60,000 new jobs in the coming years, these two giants alone are going to create more than the whole area did in 2014! With Silicon Valley thriving, you can expect to see a strong economy that will continue to create jobs, which will effectively push up both wages and the price of property!

If you're a buyer, the sooner you act, the better. The price and payment of the home you want are only going to rise. If you're a seller, it's important to realize that rising prices will hit a ceiling; we're in a seller's market right now, so there's no better time to get top dollar for your home! Give us a call or shoot us a quick email if you have any additional questions about how Google and Apple will push home prices higher in the years to come. We would love to hear from you!

As always, we'll be right here, ready to help you create a better life through real estate!  

2015 Real Estate Forecast

Welcome back, everyone. Today we are going to give you our 2015 market forecast. This information will be very useful to you as the year goes on, especially if you're thinking about buying or selling. In order to know about where we are going, it's important to know where we have been. Here are some of the numbers from 2014, split into 5 important categories:

Sales in Silicon Valley peaked back in 2012, when we sold over 18,000 homes. In 2014, we sold a little over 16,500 homes. While the number is going down, it's still a healthy figure, based on our inventory.

Back in 2010, we had 5 months of inventory, and that was the closest we've been to a balanced market. Since then, we have been on a decline, and we now only have about 1.5 months of inventory available, putting us in a hot seller's market. 

Median Price
The median home price has skyrocketed in the last few years. In 2010, the average home cost around $450,000, but with steady appreciation, including an increase of 19% between 2012 and 2013, the average price is now near $725,000. This appreciation can't be sustained for much longer, however.

Interest Rates
Mortgage interest rates are around 4% right now, but are projected to be near 5% by the end of 2015.


Affordability has decreased substantially over the last few years. In 2013, 50% of people could afford homes. That figure has dropped to 20% so far in 2015. 

So what do these numbers mean for 2015? Here are our predictions for what will happen this year:

  • We expect sales to increase, by about 2%.
  • Home prices are going to appreciate, but by just about 6%.
  • Interest rates will rise to near 5% .
  • Affordability is going to continue to decrease.

If you have been considering making a move, 2015 is the year to do it. With such low inventory, you'll be able to sell your home quickly and for top dollar. If you are buying, home prices and interest rates are expected to rise, so the home you may qualify for now could be a whole lot nicer than the one you would qualify for in a few months

If you have any questions for us, be sure to give us a call or send us an email. We look forward to hearing from you!