Silicon Valley's housing market continues to be so hot that even Bay Area real estate economist Carole Rodoni is in awe. "You have a market that I've never seen in 30 years of business," Rodoni told members of the Silicon Valley Association of Realtors.
Speaking to the Silicon Valley Realtors early this month, Rodoni said Silicon Valley is a market where you can't tell market value, it does not go by price statistics, and prices are "spread all over the map". Rodoni expects the market will continue to be this way for the next two to three years.
Rodoni, who is president of Bamboo Consulting, Inc. and former president of Fox and Carskadon Real Estate and Alain Pinel Realtors,expects the year will end with a 2.6 percent U.S. GDP growth, which is better than 1.9 percent in 2016. The stock market is up, businesses are doing well, especially with some talk of deregulation. She does not expect much from Congress this year other than more debt ceiling extensions.
"Silicon Valley doesn't care because it's on a roll," said Rodoni.
Big things are happening as the region undergoes its third boom phase, which the Bay Area real estate market guru termed "the creation of the greatest wealth." Silicon Valley grew at 7.8 percent last quarter and this quarter far higher than the nation's 2.6 percent growth and almost the highest GNP in the world, she said.
Apple, Google, Facebook continue to build and hire. Apple just announced its latest upscale iPhone which is "mind-boggling." The company is entering into the health business with new watches with a diabetes app and with a heart monitor app, which you can buy from Amazon, another company that is growing in leaps and bounds.
There are 121 IPOs going public and they don't have to be profitable, said Rodoni. Their employees are taking stock options and buying homes in Silicon Valley.
Housing market customers are baby boomers, investors, foreigners, including the Chinese, who have stepped back from the market because of their government's tightening of money outflow, but she is certain they will return. Then there are the millennials who comprise 40 percent of the market. This generation prefers an urban suburban environment that is trendy, fast moving, funky, eclectic and diverse, with entertainment and an active lifestyle all the time.
With only one month of inventory and 48 people chasing the same house, Rodoni said first-time homebuyers who are determined to purchase a home in the region need to be ready, willing and able to move quickly and sign now - without the promise of an appraisal, statistics and barely time to look at the disclosure. And if they only have $600,000, they have to face the fact that they cannot live here. This is the reality of the market and Realtors have to be honest with their buyer and tell them that, said Rodoni.
Pricing is based on condition, location, the profile of the buyer and inventory. Depending on condition and location, the price of a home can rise between 10 to 30 percent of listing price.
People are paying a lot of money to live in Silicon Valley, but Rodoni continues to say, "Real estate is still the best investment."
Online real estate companies are offering discounts to buyers and sellers if they bypass the Realtor and go directly to them. Rodoni said these companies may have a good processing format on the front end and save consumers money, but in the end, the savings may not be worth the grief of repercussions from dealing with an uninformed agent who may not even be in the same state.
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.
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