SILVAR  :  Newsroom  : Real Estate Articles

Real Estate Articles

REALTOR®: Cooling Period Doesn’t Signal Bubble Burst in Silicon Valley, Says County Assessor

Image about REALTOR®: Cooling Period Doesn’t Signal Bubble Burst in Silicon Valley, Says County Assessor
Wednesday, August 29, 2007

Even Santa Clara County Assessor Larry Stone doesn't believe news reports that the bubble is bursting in the housing market - at least, not in Silicon Valley, he told Silicon Valley Association of REALTORS® members at the Aug. 15 Los Gatos/Saratoga Tour Meeting. In fact, he said, from his observations, real estate in the Valley is merely experiencing "a cooling period." Stone described the present phase in real estate as "a market correction; not a disaster."

Santa Clara County's assessor then traced assessment rolls and real estate in Silicon Valley over the last decade, beginning in 1990-94, when properties in Silicon Valley experienced a monumental decline in values due to the S & L debacle, with commercial property declining in value by 50 to 60 percent and residential property values declining by 20 to 25 percent.

"Every type of property was impacted," said Stone. As a result, he had to reduce the assessed value of 98,000 properties in the county, and consequently, over $5 million dollars worth of property disappeared from the rolls.

When the economy turned around in 1996 with the rise of Internet companies like Yahoo and Netscape, "the Valley unquestionably became the center of phenomenon," and by 2001, Stone's office by law was obligated to increase the values of all but 300 of the 98,000 properties that previously experienced a decline in assessed value.

He explained similarly, when the economy failed in 2002, property values dropped and the assessment roll was reduced by $8 billion dollars.

"Everything happens first in Silicon Valley - fast, fastest, good, bad or otherwise," said Stone.

Today's market is once again experiencing change in the residential as well as the commercial market, according to Stone, but he stressed that the change "is a far cry from a widely reported bubble burst," and assessment rolls have "grown to a more stable, balanced roll pattern."

Between January and March, the average market value of a single family home in Santa Clara County increased from $750,000 to $800,000, contrasting sharply to others around the state, and while there has been a cooling of residential property on the low end because of the subprime lending dilemma, the higher end of the market is doing well. He announced that the commercial property market, has especially picked up, with vacancies down 36 percent and rents for office space up 18 percent.

Stone said investments have sustained the Valley during the cooling off period. "The trend is towards a healthier market, more than boom and bust, characterized by some decline in the residential sector and a boom in the commercial sector," he observed.

The county assessor pointed out that two benefits have slowed the demand for facilities:  1) the impact of the Internet and new technology on traditional warehousing – i.e., businesses like Wal-Mart no longer need large storage facilities or warehouses to store goods, since most goods go directly from the manufacturer to the shelf; and 2) outsourcing - goods are now manufactured elsewhere. Stone predicted even with the entry of other new forms of technology, i.e. biotechnology, it is likely R&D businesses would require even far less space.

Stone then highlighted several initiatives that would impact real estate, particularly local efforts to repeal Proposition 90 as a possible savings measure. To-date only seven counties have kept Proposition 90  - Santa Clara, Ventura, Alameda, San Diego, San Mateo, Los Angeles.

Stone declared he is against a proposal to charge a $30 fee to homeowners who file an assessment appeal, stating even his office can, and has made mistakes in assessing the value of a piece of property and he does not believe in penalizing a homeowner who appeals an assessment when the error could be on the part of the assessor's office.

"Real property appraisal is more of an art than a science. We are one of eight counties that mails homeowners a preliminary assessed value before the roll closes.  ... We still make mistakes and I don't believe in charging homeowners for our mistakes," said Stone.

Stone invited Realtors and homeowners to visit his office Web site at www.scc-assessor.org for the latest news and information on property tax laws and regulations.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

» Back to Real Estate Articles

Site Navigation