Is The Silicon Valley Real Estate Bubble About To Explode

Is The Silicon Valley Real Estate Bubble About To Explode

After a four-year boom, real estate prices in the country’s priciest housing market are experiencing a sudden slowdown.

While rental prices in the Bay Area are as nightmarishly expensive as they’ve ever been, it’s getting noticeably harder to sell a mansion in Silicon Valley. In super-wealthy Palo Alto, where the median price for a home is $2.1 million, Silicon Valley mansions—those costing more than $5 million—lingered on the market for 16 days in April 2016, compared to 11 days in April 2015 and 10 days in April 2014, Bloomberg reports. (The average national median time a house stays on the market, by comparison, is 67 days.) Luxury-home sales in Silicon Valley had been propped up by tech executives flush with cash after initial public offerings, and foreign buyers. But now, in the wake of tumultuous times for global financial markets, including China’s slowing economy, luxury-home sales across the country have slowed.

“The seemingly inexhaustible well of very high-end buyers has proven exhaustible after all,” an executive at real estate consultancy firm John Burns told Bloomberg. “The peak is behind us, and that’s becoming clearer and clearer to builders and buyers.” Last April, the average price of a Silicon Valley property costing more than $3 million was $4.12 million. Last month, that price dropped to $3.76 million, according to the National Association of Realtors. One Palto Alto-based realtor says he’s seen less interest for properties that cost more than $4 million. “The market is cooling down,” he says. “It doesn’t mean the market is going to crash tomorrow. This is a time where basically we have reached a point where it’s too expensive.”

But don’t think Silicon Valley’s housing market is going to reflect the rest of America any time soon. Realtors say there’s still plenty of demand for homes costing between $2 million and $3 million—those are the homes affordable to software engineers and tech execs in the Valley alike. And if a median-priced home in the Bay Area is outside your budget, you can still try your luck renting. Just be prepared to bid against your fellow Silicon Valley apartment-seekers, Hunger Games-style.

Maya Kosoff writes about tech for, with a focus on start-ups and venture capital.

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Phone: 956-587-1633
Dated: May 20th 2016
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About Marilyn: Always ahead of the highly competitive RGV real estate market, Marilyn Cortez is a Spanish speaking ...

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