Q1 2019 Silicon Valley Real Estate Market in Transition

After a slow summer and winter market of 2018, our real estate market in Silicon Valley has showed signed of recovery starting at the beginning of 2019. There has been more buyer activities, however, with the concern of the further possible drop in the back of the mind, most buyers are tip-toeing around. In the last few weeks however, more solid offers from buyers have become more, showing the signs of market getting busier. Clearly the market is in transition, which can go either way, let's dive deeper and take a look at some of the dimensions of this transitioning market.

Bay Area's Current Market Overall

Overall, there are currently more homes on the market this Quarter than last year throughout all counties. It is largely due to homes that were successfully sold and came off the market last year during the slow-down are also coming back on the market along with the other new listings. As the market approaching Summer, more homes are expected to come on the market, meanwhile, although buyers are out taking actions, the average days on market for these homes have increased to 30-40 days, showing that buyers are more cautious.

Mortgage Rates

On the last rate hike, I was predicting that there would be 3 more rate hikes in 2019. However, The Federal Reserve has officially announced that they do not plan to raise interest this year. The current Mortgage rate has gone down, creating more buying powers among the home shoppers.

Exhibit 1 – 30 Year Fixed Mortgage Average in the United States

NASDAQ

Stock market has long been a factor of real estate market health at the macro-economic level. NASDAQ being the heavily tech centered exchange is where all major Bay Area tech giants are listed. The NASDAQ market has indicated that the market has recovered from it's December's dive.

Exhibit 2 – NASDAQ Snapshot April 3, 2019

The long waited Tech IPO’s

Finally, another round of major IPOs happening among the Bay Area Tech Giants. LFyt went IPO a few days ago and we got Uber, Slack, Pinerest, Postmates and Zoom all being the next on deck, this is definitely going to be an exciting and interesting year in the tech industry. Bay Area tech companies are changing how people around the world are living lives, and they are differently changing the economy of our local bay area market. San Francisco is definitely going to be the center of wealth this time followed by the Peninsula and south bay due to the work commute. The outlook on our local real estate market is optimistically positive, yet the effect needs to wait and see as the typical 6 month lockout period imposed by company's IPO is usually the case reason that the new wealth won't immediately be entering into real estate market after the IPO. Nevertheless, this will definitely shape up second half of 2019 and onto 2020, making it a very opportunistic market for both buyers and sellers.

X Factor - The Crypto Market

Whether you are are fan of bitcoin or not, 2017 was the year the whole world went mad with Bitcoin. Bitcoin went from $3000 to $20000 in just 6 months, creating a chain effect in the world's wealth distribution. Even homes had been seen transacting in Bitcoin (great idea right?). As Bitcoin quickly went from $20000 back down to $5000 in a few short months and remain under $4000 for most part of the 2018, driving away the opportunists and hit-and-run investors, the money market returned to traditional and regulated ways of investing, the word 'Blockchain' was synonymous to 'scam' in most people's mind. However, the die-hard believers of blockchain and Bitcoin never left and the revolution of the century long money and record system continues in the background. After being stuck under $4000 for most part of 2018, Bitcoin has suddenly soared 39% in just a few days, breaking the $4000 and $4600 hard resistance, now being valued at $5184 (the moment of this post), is Bitcoin on it's way to $8000? What effect would it have on the market money again just like the last time? This time, with the whole world getting more familiar with the cryptocurrency and Bay Area being the biggest Block Chain Hub, what is going to happen with the local startup culture, investment culture and VC funding behavior? It is an X-Factor that needs to wait and observe but definitely making the next 2 years more interesting than ever. Again, it's all about opportunity and timing.

Exhibit 3 – Bitcoin Chart April 3, 2019

Looking Forward to Q2 2019

With lower interest rates, a rebound in the stock market and more inventory, the market is definitely coming back and showing the characteristics of a more balanced market. The current buyer behavior indicates that buyers are taking actions on homes they like, but they are not jumping on to any homes like before. Homes that are in great condition, great appeals in desirable neighborhood with competitive pricing are still selling quick with top dollars. With the anticipation of more homes coming on the market, there is definitely more competitions among sellers and more choices for buyers in the coming season. In order to sell your home for the Top dollars, a more complete marketing strategy and negotiating tactics is what's going to make a difference.

I hope you enjoy the coming month of Sunshine :)

Reach out to me at bojieteam@gmail.com (408)786-7564 for any real estate needs.

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