Silicon Valley Real Estate Market December 2023
By the end of the year, approximately 4 million homes will change hands, marking a volume similar to that of 2008 and potentially the lowest level of home sale transactions since 1993.
This trend signifies a bear market in terms of transaction volume, although prices have not gone down in most areas.
Interest rates are showing signs of softening, prompting optimism among industry insiders. There is a prevailing prediction that rates may dip below 6% at some point in 2024, along with the potential for a modest recession in the same year. With 2024 being an election year, experts do not anticipate a significant impact on the real estate market in California.
Over 7,000 wildfires occur annually in California. This has led to insurance providers taking restrictive measures, such as Safeco choosing not to renew 950 policies in San Francisco and the East Bay, Farmers Insurance imposing limits on new home insurance policies each month, and Allstate and State Farm ceasing the sale of new policies. Alternative solutions are available. The California FAIR Plan, a state-mandated program serving as a last-resort option for homeowners struggling to secure coverage on the private market, has witnessed a significant 219% increase.
There has been a substantial surge in new construction activities over the past year, largely driven by the construction of Accessory Dwelling Units (ADUs). Notably 27,000 units permitted in Los Angeles. 3,000 in San Diego, 2,000 in San Jose, 1,000 each in Oakland, Berkeley, San Francisco. etc.
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Below is a buyer demand vs. interest rate chart. As rates go up, the demand drops. Also stats for the last 13 months in Santa Clara and San Mateo counties. Stats in other areas are available upon request.
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