Here are my predictions for Silicon Valley's near real estate future as of August 2021
by Deniece Smith - "got agent?" - Compass
While I certainly do not hold a real estate crystal ball, there are some things that seem to be very probable in the near future. In selling for 22 years, we learn seasonal and cyclical patterns if paying attention. Here are my thoughts.
1. More inventory coming on just after Labor Day.
Schools are back in session and in person. This means that all of the families that were tired of being on "lockdown" during COVID-19 last year, have now had a chance to get out of their houses, go see the great outdoors, and are now returning. Unfortunately, we have new variants of COVID that are causing lots of uncertainty with just how long things can stay open. With this in mind families who were feeling like once COVID was over, they would be OK in their homes, might now be rethinking the decisions they made last year and will choose to finally get to that home that is more comfortable for the foreseeable future.
2. Interest rates will "tease" upward to test reaction.
Sometimes we see interest rates threaten to increase which causes Buyers to get more serious about their purchases. We are at historically low interest rates currently, with a 30-year fixed rate for a jumbo conforming loan (which in Santa Clara and San Mateo Counties maxes out at $822,375 for one unit and $1,053,000 for two units) as low as 2.875%. This tease allows the powers that be to calculate the fear factor in actually raising the rates. Based on how Buyers act knowing there could be a hike in rates, banks can calculate if actually raising rates would boost or hurt business.
3. Permit timeframes will be painfully lengthy.
Recently I have worked with the San Mateo County Planning and Building Departments as well as the Pacifica Planning Department. Some things to note are that most technicians in the departments have recently been hired. They explain that there is such a permit backlog that it takes up to 30 days just to route the questions to the right person. It might take another 30-60 days to get any type of answer.
It's thus fair to conclude that anyone thinking of rushing a project through this year may be out of luck.
4. Building costs will be so exorbitant that people may choose to move rather than remodel.
I'm not sure if you've visited any locations around the San Francisco Bay recently, but if so, you may have noticed the huge amounts of container ships just parked in the middle of it. From electronic materials, to vehicle parts, to building materials, these ships deliver much-needed manufacturing supplies. Well, those supplies are stuck, right in plain sight.
"Under normal circumstances there would be zero ships waiting to be unloaded", says Roberto Bernardo, a spokesperson for the Port of Oakland, in an article published by KQED. The case now, is that you can see ten, even twenty ships on any given day, just waiting for their turn to unload. This is costing suppliers money, which in-turn, will cost the consumer more money.
With permit times taking so long and materials hard to come by, expect remodeling and building to be at a premium cost.
5. It will be a great time to Sell!
As if we haven't seen this year be a great time to sell yet, with prices increasing in Santa Clara County by 22.5% year over year, per the Santa Clara County Association of Realtors, this Fall should be a phenomenal time to sell. Those wanting to buy will be really serious knowing how hard a remodel could be and that rates are at historic lows. Winter could, unfortunately, present us with more COVID woes and people may be wanting to create that home stability before we get into the cold season.
For any and all of your real estate needs, including referrals to a great agent out of Silicon Valley, please do call me at 650-483-2055. Deniece Smith - "got agent?"