A Year in the San Jose Market

Kicking off 2020, San Jose’s real estate market is rapidly shifting and showing strong signs of returning to the ever familiar seller’s market from 2013-2018 with buyers galore and inventory lacking across all neighborhoods in virtually every price point. The reason the uptick is surprising this time around is due to the changes noted in the second half of 2018 and all of 2019, where homes sat on the market for weeks or months and “Price Reduced!” became a favorite email subject line from listing agents all over the Bay Area. This short-lived market change was as many economists projected a slowing of the market trajectory coupled with buyers fearing the market was past its peak. 

Buyer sentiment changes rather quickly where there is nothing glaring to point at as to why a market is up or down. So, nearly as soon as the market slowed, which is what buyers claimed to be waiting for, they then wanted to see how far down prices would go in an understandable effort to buy lower and not see their investment go down in value from the day they buy it. The problem with that logic is here in Silicon Valley, home supply is heavily outweighed by a steady population increase.

With that, demand is nearly forced into the market no matter how bad people want prices to come down. The market in 2019 saw values begin to dip which instantly seems to spread fear of a crash. No traditional economic indicators show a crash is on the horizon, however, a crash generally comes without warning so when trends change buyers are tentative until the market changes or they can embrace a longer-term picture of their real individual estate goals.

As we turned the clock to 2020 it seems as though many buyers were waiting for the new year and now want to get into the market before spring demand brings prices back to life. The average buyer in Silicon Valley is savvy. They are intelligent people who came to this specific part of the country because of their abilities to analyze technically and make data-driven decisions.

So while jumping in front of what is commonly a more competitive time in the market is an intelligent approach to any investment, if everyone thinks the same way, markets move faster than statistically understood.

In the first few weeks this year, we have seen 8, 14, 16, 27, 36 offers on properties, some with over 100 buyers requesting disclosures. This type of activity isn’t for one-off listings that are extremely underpriced. They are for the homes that are well maintained, priced below value, or in decent school districts. And this is just the first few weeks of the year. When this has happened early in the year of years past, record-setting springs followed.

With 2019 in the rearview mirror, so far 2020 has shown the market is bouncing back in a major way.