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Silicon Valley Real Estate Forecast: One of the Top 5 Markets in 2019?
A recent forecast for the Silicon Valley real estate market suggests that it could be one of the top five markets over the next year or so, in terms of home-price appreciation. San Jose, Santa Clara, and Sunnyvale were singled out in the report, which predicted above-average price growth into the summer of 2019.
Big Forecast for Silicon Valley Real Estate Market
In July 2018, Veros Real Estate Solutions published an update to its VerosFORECAST. They predicted that home values nationwide would rise at an average of 4.4% over the next 12 months, from June 2018 to June 2019.
But their predictions for the Silicon Valley housing market were much stronger than the national outlook. In fact, they ranked the San Jose-Sunnyvale-Santa Clara as being #4 in the nation, in terms of expected home-price gains during that 12-month period.
The Santa Ana-based property valuation and analytics company predicted that the Silicon Valley real estate market would appreciate by nearly 10% during the one-year time frame mentioned above.
Here are the top five metros nationwide for expected gains from June 2018 to June 2019:
- Seattle-Tacoma-Bellevue, Washington (+11.1%)
- Olympia, Washington (+9.8%)
- Bremerton-Silverdale, Washington (+9.8%)
- San Jose-Sunnyvale-Santa Clara, CA (+9.5%)
- Carson City, NV (+9.5%)
Economists at Zillow also gave these Silicon Valley real estate markets above-average price forecasts for the next year. San Jose, in particular, received a strong projection with the company predicting a gain of 13.8% over the next 12 months.
Related: San Jose named hottest market in 2018
This probably comes as no surprise to local agents, home buyers, developers, and others involved in the Silicon Valley housing market. These forecasts are based on current trends within the local real estate scene. And those trends can be summed up with a single sentence: There are plenty of buyers in the market, but not enough homes for sale to meet that demand.
Fact box: Silicon Valley is the tech hub of the San Francisco Bay Area. It’s located within the Santa Clara Valley and includes the cities of Palo Alto, Santa Clara, Mountain View, San Jose and Sunnyvale. Major employers include Apple, Facebook and Google. Silicon Valley has a population between 3.5 and 4 million people, depending on what regions are included.
A Serious Imbalance Between Supply and Demand
There’s an interesting supply-and-demand story taking place here. That is what’s driving the bold predictions and forecasts for the Silicon Valley real estate market.
All of the housing markets mentioned above — Mountain View, Santa Clara, Sunnyvale and San Jose — currently have inventory levels that are well below the national average.
A “balanced” real estate market has about five to six months of supply, according to economists. But as of July 2018, each of these cities had about a one-month supply of homes for sale, or less. So it’s an understatement to call them seller’s markets.
Eric Fox, VP of Statistical and Economic Modeling at Veros Real Estate Solutions, cited the lopsided supply-and-demand situation in Silicon Valley (and in San Jose in particular) as one of the key reasons for their strong housing market forecast.
“The San Jose market remains exceedingly strong with a supply of homes at an extremely low 1.0 months, while its population is continuing to grow steadily,” Fox said. “Its unemployment is an extremely low 2.6%. The Silicon Valley continues to attract workers for high tech jobs, and there isn’t enough housing to fill demand, making this one of the strongest markets in the country.”
Related: Bay Area housing outlook for 2019
Disclaimer: This article contains forecasts and projections relating to the real estate market in Silicon Valley. These data and insights were provided by third parties outside of our company. We’ve compiled them here as an educational service to our readers.
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