Whether you are already a homeowner or are looking to buy your first home in Silicon Valley, you are likely aware of the many changes in the real estate market over the past few years.
In 2022, shifts in the market are sparking discussions on what is to come in 2023, with people wondering whether home prices will increase, decrease, or stabilize.
Since 2020, homes have continued to increase in value with no end in sight. But as we all know, a market will always make a correction over time as the current rate of appreciation isn’t sustainable long-term.
You may have even heard reference to a potential “housing recession” and a decline in home values. Fortunately, real estate is truly market-dependent.
Silicon Valley has continued to be a highly sought-after area in which to own a home, with a low supply of houses meaning the real estate market in this area won’t be cooling off like other areas of the country.
The overall U.S. real estate landscape
Before we dive deeper into the real estate predictions for Silicon Valley, let’s first take a look at the overall landscape of the U.S. real estate market.
There are clear indications and data to support the idea that the real estate market is slowing down
, the supply of homes is increasing, and there are fewer buyers than there were a year ago.
But the key thing to remember is that some markets will feel the effect more than others. California as a whole has always had a strong real estate market with healthy appreciation values.
The good news is that owning a home in California will continue to display growth in appreciation, although not quite at the rate we’ve experienced over the past two years.
You’ve heard many times that location matters when buying a home. That is true, and it also applies to any given housing market.
Silicon Valley will likely remain a highly desirable market to live in for its incredible year-round sunny weather, great job market, nearby green spaces, national parks, beaches, top attractions, and the finest education choices.
Over the past few months, interest rates for home mortgages have increased, causing some home buyers to reconsider whether it is the right time to buy a home or not.
Even with the increase in rates, the rates are still equal to or less than they were just three or four years ago. With that perspective, many people will continue to purchase homes, just not at the same growth rate.
In Silicon Valley, increasing interest rates will be a factor for some, but it won’t have a substantial effect on the overall real estate market as compared to other markets in the U.S. This is largely due to Silicon Valley’s proximity to so many attractions, excellent weather, and ample job and education options.
Silicon Valley housing supply
Silicon Valley has for many years had a shortage of houses for the associated demand. For any homeowner in the area, this is excellent news, as the value increases when there is a low supply but high demand.
Heading into 2023, there will continue to be a shortage of available homes to purchase, buffering Silicon Valley from the decline in home values as seen in other markets.
Even with fewer home buyers, the low supply will slightly insulate Silicon Valley as there will always be a demand for housing here.
There is limited space in Silicon Valley with no or limited new construction. This adds to the stability of home values regardless of what is happening in other parts of the country.
Will Silicon Valley home prices continue to rise?
The big question everyone has for 2023 is whether home values will increase or decrease.
Although there is no crystal ball that can completely predict the future, many experts are anticipating real estate prices in Silicon Valley to decrease
by anywhere from 8-9%.
Are we entering a buyer’s market in 2023?
Yes, in some markets in the country, but in Silicon Valley it is unlikely we will see a buyer’s market.
Bidding wars might be seen less frequently, or at least the increments of bids will lower, but homes will likely continue to sell over the asking price, at least for the first part of the year. Due to the persistent low inventory
in the Bay Area, it is unlikely that we will see a traditional buyer’s market.
Sellers will have a little less control, with buyers beginning to see more negotiating power than in the previous two years.
That said, Silicon Valley will likely not see a full buyer’s market anytime in the near future.
Ready to buy or sell in Silicon Valley?
The excellent news for the Silicon Valley market is its ability to remain robust and slightly insulated due to its location and desirable qualities.
As for 2023, low supply and high demand will continue to boost the Silicon Valley real estate market but at a slower and more moderate rate.
If you are ready to buy or sell a home and are searching for an excellent Los Altos real estate agent
to work with, contact Suzanne Freeze-Manning
. She is an experienced and trusted real estate agent in Silicon Valley who can help you sell or locate Los Altos Hills and Los Altos homes for sale.