The median single-family home price declined and condo prices rose month-over-month. Year-over-year, single-family home prices rose considerably, while condo prices showed price stability.
Median single-family home prices were mixed across Silicon Valley counties. Prices have remained quite stable over the last 12 months.
Year-over-year, all counties saw substantial gains, up 13% in San Mateo, 15% in Santa Clara, and 28% in Santa Cruz.
As you can see in the graph on the next page, median condo prices were mixed across counties. San Mateo condo prices are slightly lower than last year, while Santa Clara and Santa Cruz condo prices rose.
Single-family home inventory remained lower through 2020 relative to 2019 and dropped even further in January and February 2021, which speaks to the desirability of the Silicon Valley area. During the pandemic, fewer people wanted to leave, and more people wanted to move to the area. New listings were lower than normal throughout the year, while sales were much higher. Sales in the autumn of 2020 were not as substantial as the year before, and inventory is now slightly higher than last year. In Silicon Valley, which is in a perpetual state of undersupply, the larger inventory is welcome. Demand is still high in the area, and we expect prices to continue to appreciate throughout 2021.
Like single-family homes, the number of condos on the market declined, but not to last year’s levels.
For single-family homes and condos, Days on Market (DOM) is trending upward, but both are still selling relatively quickly.
We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California (far lower than the national average of six months), which indicates a balanced market. An MSI lower than three means that there are more buyers than sellers on the market (i.e., it is a sellers’ market), while a higher MSI means there are more sellers than buyers (i.e., it is a buyers’ market). In January 2021, the MSI remained below two months of supply for both single-family homes and condos, favoring sellers.
In summary, the high demand and low supply present in Silicon Valley has buoyed home prices. Inventory for single-family homes and condos will likely decline further this year, and fewer sellers will likely come to market, which will potentially lift prices higher. Overall, the housing market has shown its resilience through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong through this period.
We anticipate new listings to slow until around March 2021. While the winter season tends to see a slowdown in activity, January 2021 showed higher-than-normal sales, once again highlighting the desirability of Silicon Valley.
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’ve 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.