A cooling market means more room to run in 2022
- Single-family home prices and condo prices increased significantly in 2021. Home prices rose across counties:
- San Mateo County: +14% for single-family homes; +5% for condos
- Santa Clara County: +26% for single-family homes; +18% for condos
- Santa Cruz County: +12% for single-family homes; 0% for condos
- Despite historically low inventory, the increase in home sales and speed of sales reflect the high demand in Silicon Valley.
- Months of Supply Inventory further indicates a sellers’ market.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
Home prices still have room to run in 2022
After the rapid price appreciation of single-family homes in the first half of 2021, it makes sense that price increases would slow in the second half. Although no market was at an all-time high in December, Silicon Valley home prices remain historically high, but year-over-year price appreciation is decelerating. We expect price appreciation will be more muted as we make our way through the winter months, and then pick up again in the spring and summer seasons.
Like single-family homes, condo prices in Santa Clara increased considerably in 2021 and reached an all-time high in December. Santa Cruz County condo prices declined sharply in December, bringing prices flat for the year. With fewer single-family homes on the market, we are seeing higher demand for condos.
The Silicon Valley market does seem to be cooling, which is a seasonal norm this time of year. However, with inventory at record lows, we could easily see prices start to rise once again in 2022, especially in the spring and summer seasons.
Back to record low inventory
Despite the slight increase in single-family home inventory in the first half of 2021, the sustained high demand and lack of new listings in the second half brought single-family home and condo supply to historic lows. Once again, we are seeing that far more people want to live in Silicon Valley than want to leave. Sales in Silicon Valley have been incredibly high, especially when accounting for available inventory, again highlighting demand in the area. Sellers can expect multiple offers, and buyers should come with competitive offers.
Months of Supply Inventory further indicates high demand
Homes are still selling extremely quickly, indicating the high demand in Silicon Valley. Buyers must put in competitive offers, which, on average, are 3–6% above list price.
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Currently, single-family home and condo MSIs are both historically low, strongly indicating a sellers’ market.
Loal Lowdown Data
Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.
In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we put together this monthly analysis breaking down specifics about the market.
As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.