Silicon Valley has long been a major hub for technology companies, and is the breeding ground for brands like Facebook, Google, Oracle, LinkedIn, and many more.
As the hottest technology hub in the world continues to see great success, it attracts competitive talent from the far reaches of the country. To bring in top workers, Silicon Valley salaries have skyrocketed. With those high salaries and stock options, Silicon Valley has created lots of millionaires. In fact, Silicon Valley has the second highest concentration of millionaires in the country.
And those millionaires want to own homes. Big, fancy ones. However, as the rules of supply and demand dictate, there are limited homes for all of this money, and prices have skyrocketed from San Francisco to San Jose and in surrounding cities.
Silicon Valley real estate has been climbing higher and higher for years, but it looks like that growth may be slowing down.
Silicon Valley Real Estate Slowing
Ultra-wealthy Palo Alto is home to many multi-million dollar homes, and inventory for Palo Alto mansions is typically very low. In April 2015, the average $5 million home sat on the market for 10 days, but according to Vanity Fair, that increased to 16 days in 2016, a 60% increase.
MarketWatch noted that the Silicon Valley real estate market looks eerily similar to the situation just before the stock market tech bubble burst in 2000. But with so much wealth of homeowners in the Bay Area tied up in company stocks, a tech bubble burst in stock may lead to a domino effect pushing down Silicon Valley real estate prices.
Is it Time to Rent or Horde Cash?
If you suspect the property bubble burst is on its way, or a slower deflation may be on the horizon, it is not time to put your money into real estate investments. Instead, locals may be safer renting and keeping their cash in safer places, like fixed income ETFs and mutual funds.
No one has a crystal ball that predicts real estate prices for sure, but with signs that Silicon Valley real estate has hit the peak, it is a risky investment to put your cash into a market where prices may be headed lower in the coming months.
If you are set on purchasing a property in the area, however, it is vital to work with a savvy and trustworthy agent who has a good understanding of the current market and where you can find the best location to enjoy and protect your nest egg.
Start Your Search for the Perfect Agent with AgentHarvest
Searching for a home can be stressful, and hard work. If you are starting the search for the perfect home, you have to start with the perfect agent. And finding the perfect agent is easier than ever before.
At AgentHarvest, our crack team of experienced real estate experts has vetted and qualified every agent listed. We do the hard work so you don’t have to. When you are ready to buy or sell your next home, get started at AgentHarvest.