During June 2021, in Silicon Valley, the median single-family home price rose to a new all-time high. Condo prices rose month-over-month to the highest level in the last 24 months. By county, San Mateo and Santa Clara both rose month-over-month, while Santa Cruz prices fell from the May peak.
Year-over-year, single-family home prices rose significantly in Silicon Valley.
As you can see in the graph below, median condo prices increased across counties. Unlike single-family homes, Santa Cruz condos had the largest year-over-year percentage price increase.
Single-family home inventory began to climb at the start of 2021 in anticipation of the spring season, when more sellers typically come to market, but has begun to decline once again. To gain a full picture of the current market, we must view it in the context of last year. In 2020, fewer people wanted to leave Silicon Valley, while more people wanted to move to the area. This trend drove inventory down to record low levels. New listings, therefore, improve the current market conditions. However, new listings aren’t keeping up with demand. In June 2021, Silicon Valley had 15% fewer homes for sale than it did in June 2020. Furthermore, when we compare the current inventory to June 2019 (pre-pandemic) levels, the number of homes for sale has declined by 27%. The sustained low inventory will likely cause prices to appreciate throughout 2021.
The number of condos on the market declined in June 2021, dropping inventory lower than last year’s levels. Although we’ve seen more condos than usual come to market over the last three months, condo sales reached their highest level over the last 24 months in Silicon Valley in June.
Both single-family homes and condos spent less time on the market in June 2021 than they did in June of last year. As we’ll see, the pace of sales has contributed to the low Months of Supply Inventory (MSI) over the past several months.
We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three means that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI means there are more sellers than buyers (meaning it’s a buyers’ market). In June 2021, the MSI fell below one month of supply for single-family homes and condos, indicating that the market strongly favors sellers.
In summary, the high demand and low supply present in Silicon Valley have driven home prices up. Inventory will likely remain low this year with the sustained high demand in the area. Overall, the housing market has shown its value through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong throughout this period.
We expect that the number of new listings will increase in the summer months. The current market conditions, however, can withstand a high number of new listings coming to market, and more sellers may also enter the market to capitalize on the high buyer demand. As we navigate the summer season, we expect the high demand to continue, and new houses on the market to be sold quickly.
As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we have shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.