During March 2021 in Silicon Valley, the median single-family home price rose to another all-time high, while condo prices rose slightly month-over-month. Year-over-year, single-family home prices increased considerably, up 13% in San Mateo, 14% in Santa Clara, and 19% in Santa Cruz.
As you can see in the graph below, median condo prices were mixed across counties. Santa Clara and Santa Cruz were up year-over-year, while San Mateo condos declined.
Single-family home inventory began to climb over the last two months in anticipation of the spring season, when more sellers typically come to market. In 2020, fewer people wanted to leave Silicon Valley and more people wanted to move to the area, which drove inventory down to record low levels. New listings, therefore, improve the current market conditions. Since the start of 2021, more homes than usual have come to market, causing inventory to rise. In March 2021, Silicon Valley had 9% more homes for sale than it did in March 2020. More selection has translated to 40% more sales than last year. Ultimately, inventory is still low, and the sustained low inventory will likely cause prices to appreciate throughout 2021.
Both single-family homes and condos are selling quickly. As we will 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 (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 (that is, it is a sellers’ market), while a higher MSI means there are more sellers than buyers (that is, it is a buyers’ market). In March 2021, the MSI fell below one month of supply for single-family homes and remained below two months for condos, indicating that the market strongly favors sellers.
In summary, the high demand and low supply present in Silicon Valley have driven home price appreciation. Inventory will likely remain low this year with fewer sellers coming to market, potentially lifting 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 throughout this period.
We anticipate new listings to accelerate into the summer months. The current market conditions could withstand a high number of new listings coming to market, and more sellers could enter the market to capitalize on the high buyer demand. As we enter the spring 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’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.
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’ve 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.