Where do you think our Silicon Valley real estate market is heading? Is it still a good time to buy or hold?

Asked by Trung Lam & Evan, San Jose, CA Mon Sep 23, 2013

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John Juarez’s answer
John Juarez, Agent, Fremont, CA
Mon Sep 23, 2013
Silicon Valley real estate will continue its long-term upwards climb over the years to come.

Short term forecasts are notoriously unreliable. You will find conflicting opinions.

Silicon Valley continues to be a seller’s market now but markets change over time.
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Sam Shueh, , San Jose, CA
Sat Sep 28, 2013
Upward until market can not sustain at current level. Everyone knows the shortage of housing and strong demand from high tech industry will push the home prices more.

Just because west & central side of the Santa Clara County have surpassed historically high, there are still many neighborhoods have not still max out yet.

There are plenty of investors who are happy with 3-4% cap rate. Many seem to have forgotten that rentals in the past always ran negative cash flow. There was never a shortage for an investment home since tax write off was useful to offset hefty income from many.
0 votes
The Medford…, Agent, Fremont, CA
Tue Sep 24, 2013
Evan, as a Realtor, you have access to past data and trends and should be aware that the Silicon Valley retained a higher percentage of value during the depression than outlying areas. You should also be aware that the percentage of growth during the past 18 months has been less than those in rebounding areas that were more highly depressed. Lastly, I'm confident that you understand that past gains are no guarantee for the future and no one has a crystal ball to see where we are headed.

Overall, the Silicon Valley market has been pounding upward for the past 18 months and finally appears to be slowing to catch it's breath. How will this translate into the coming months? No one knows. You might want to consider reading the following post:

Housing Market Cooling Off: Top 5 Reasons

Because the Silicon Valley is really at the heart of Bay Area values, it is a much safer place to buy so long as the fundamentals are correct.

What you don't specify in your question is whether or not the "buyer" you are referring to is a normal home buyer or an investor: the answer to this question differs greatly based on who is buying the home. If the purchaser is a normal buyer looking to purchase a Silicon Valley home close to good schools and their work AND they plan on living there a ling time, then there is no wrong time to buy. The goal is a roof over their head, not an investment per se. Over time, they will more than likely see increases in the value of their home.

If, however, the buyer is an investor, the answer is different. I personally don't buy investment properties based on speculative return: I buy based on whether of not the property cash flows out of the gate. As prices increase in Silicon Valley, it's becoming very difficult to find properties with a good CAP rate.

Since you are a Realtor, I'd be interested in your take on this.
0 votes
Lisa-Hoa Tran, Agent, Milpitas, CA
Tue Sep 24, 2013
Hi Evan,
I agree with Charles and other two agents, Bay area housing market still has high demand and pricing has room to growth comparing when a pick time . In addition to that the interest rates are still low , around 4.375% for 30 yrs fixed .
I had been helping buyers to purchase homes in Silicon Valley -area almost 20 yrs with experience enthusiasm, trusted Realtor . Living and Knowing San Jose very well .
Whenever you feel comfortable and ready to purchase or have any questions
Please feel free to give me call

Lisa Hoa Tran, Broker
Bre# 01143348
P: 408-941-9960
ByLand Realty & Mortgage
1772 clear Lake Ave, Ste# 200
Milpitas, CA 95035
Email: lisa@bylandrealty.com
0 votes
Juliana Lee, Agent, Palo Alto, CA
Mon Sep 23, 2013
San Jose, in part because in covers such a wide and diverse area, still has areas where home values have not reached the peaks of 2007.
Zip code 95148 is one of the areas that hasn't reached its 2007 home value peak

There is room for growth. The amount of growth depends upon whether the local job market is more attractive than other areas and upon government policy decisions. I changed how I present home values from value versus quarter to include value versus month so that changes could be seen sooner.

Juliana Lee
Top 2 agent nationwide at Keller Williams Realty, the nations largest
Cell 650.857.1000

Over 20 years experience
Over 1,000 homes sold in Santa Clara County and San Mateo County
Web Reference:  http://julianalee.com
0 votes
charles butt…, Agent, san jose, CA
Mon Sep 23, 2013
Thank you for your question, Evan:

I agree with Mr. Juarez:

The Silicon Valley is essentially "built out". There is no place left to build. The economy of the Silicon Valley is strong and the economy of the Silicon Valley is continuing to grow. With no place left to build, that means that real estate prices will continue to be bid up.

Essentially the Silicon Valley is becoming the place where top management lives. The lower level, lower pay jobs are outsourced to other locations. That trend will continue for years.

The result is that residential real estate, especially single family homes, with a decent size lot will become a luxury for only the very rich and highest paid executives. Real Estate prices will be bid up to levels even higher than they are now.

The greatest amount of demand is for the locations with the highest rated schools. Therefore, the locations with the highest rated schools will be bid up to the highest levels.

Short term, real estate prices will bounce around in an unpredictable manner. Anyone who tells you that they can predict the short term moves in the real estate market over the next 3 to 6 months to a year, does not know what they are talking about. Short term moves in the real estate market are very dependent upon political decisions which are often unpredictable, arbitrary, short term and emotion laden.. Long term, because powerful economic forces, prices will bid up much higher than they are today.

I recommend that you buy your own home as soon as you are able to do so.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
Broker/Owner: The Butterfield Real Estate Firm
Cell Phone: (408)509-6218
Email Address: charlesbutterfieldbkr@yahoo.com
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