The Silicon Valley has the nation’s highest priced housing market. There are many factors which go into why home prices here are so much higher than elsewhere in the country. Supply and demand are two ends of the equation, and often very far apart. This has led to affordable housing being a challenge for many; but for much of the population working in the high tech industry, our home prices fit in line with their income.
I read an article recently in the Washington Post which highlighted the struggles some home buyers are facing in the Silicon Valley. It had some interesting points, comparing prices to other regions, and noting how many homes priced over $1 million are in need of updating or a lot of repairs, yet buyers still compete for them. There is more to the real estate market in the Silicon Valley than comparison to the rest of the country.
The Silicon Valley economy operates differently than elsewhere in the United States. With this being the capital of the American high tech industry, our economy is an international one. It is here that businesses providing products such as Apple’s iPhone, services like Amazon Prime and social media apps like Facebook, are headquartered. These devices and systems have affect not only the daily lives of Americans, their impacts are felt world-wide. A great deal of money comes into the Silicon Valley from places such as China, Hong Kong, and Japan, the world fuels our economy here. Of interesting note, being a part of the world market, the Silicon Valley actually has cheap real estate in comparison to many other countries.
The Silicon Valley with its mild climate and access to incredible recreational areas from the coast to the mountains, has long been attractive to the movers and shakers of the high tech industry. This is an industry which takes many brilliant minds working in a variety of ways to succeed. Intelligent, successful and talented people are needed, which these businesses have been able to recruit continually.
Salary is a big incentive, and with our international economy, paying at higher levels is achievable, which in turn makes higher home prices affordable for many. While this region has a booming economy with salaries often much higher than the rest of the country, it is important to remember the majority of these people may seem wealthy to others, but they are still ‘regular’ working folks looking to provide a home for their families. Well educated people working in the high tech industry will be able to make more money for the work that they do, in the Silicon Valley, they can find work that pays them accordingly.
The Silicon Valley high tech industry is so strong we saw 60,000 new jobs created in 2015, and another 44,000 are estimated for this year, yet our housing supply doesn’t meet up with this influx of new residents. In 2015 only 5,000 new housing units were built in our region, and another 6,000 are planned for 2016. This is not enough to meet the demand, and is what drives the housing prices so high.
This region is looking into different options for housing to meet the demand. But this is done at local community levels and will take time to put into motion. In the meantime, the Silicon Valley is also very attractive for the real estate investor, as rental units are highly sought after. Our strong economy supports the housing occupancy ratio with high quality tenants.
When you are ready to buy or sell your home, working with a Realtor® who understands our economy and how it affects the housing market, will make a big difference. We at Haylen Group are here to help you with all of your real estate needs! As your buyer agent we will strive to work together and give you the best support we can. Call Helen Chong at (408) 800-LIST or email at Helen@HaylenGroup.com. You can also visit us at our website for available listings and additional information.