AI boom awakens Silicon Valley’s real estate market

Many first-time home buyers feel very wealthy.

The competition for homes intensifies as the mass exodus to lower-cost locations in the United States, which began in Northern California, winds down. Return-to office mandates are forcing workers to look for homes near the many corporate headquarters scattered across the suburbs, from Apple to Alphabet and AI chipmaker Nvidia. Their share prices have tripled in the last year.

It has also helped counter the effects of the thousands of layoffs in the tech sector. Even a small increase in demand can trigger bidding battles in an industry known for its scarcity.

Silicon Valley’s housing market is being re-ignited by the AI boom.

San Jose is a hotbed of open houses. Starter homes worth millions sell for thousands above the asking price.

Many buyers are taking advantage of the recent decline in mortgage interest rates. Also, they have a lot of money after an exuberant year-long rally for Big Tech stocks fueled by AI. Many people who buy a home for the first time are new to it.

Silicon Valley and San Francisco Bay Area are tied more closely to the fortunes in the tech sector than any other US housing market. Other hubs such as Boston, Seattle and Denver may also see an increase in demand for their services during the crucial spring selling season that traditionally starts right after Super Bowl Weekend.

San Jose leads the way with the fastest rate of home sales in the 50 largest US metropolitan areas. Redfin data for the four weeks ending February 4 shows that 61 percent of all new listings in San Jose were sold within 14 days. Seattle, home to, Microsoft and Microsoft, came in second with 59 percent of listings disappearing that quickly.

Redfin stated that the average price of properties sold in San Jose was 2 percent over the list. Redfin said that this could translate into a significant price premium in an area where sellers had asked for a median asking price of US$1.3million.

The company stocks they receive are often a significant part of the compensation that software engineers and tech employees earn, explaining how these people can afford to buy such expensive homes.

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With a salary of US$200,000, you cannot buy a US$3,000,000 house in Los Altos. However, with your stock portfolio.


Karan and his wife, both tech workers, had been searching for months. They were eager to buy something before the price rose even further. The 100 people who would tour an open house and the barrage of bids that they received were enough to discourage them.

Then they changed strategy, and began making offers right after the agents tease them that a new property is coming to market soon.

They had their eye on a house of 2,000 square feet (sqft) in San Jose’s highly sought after Cambrian School District, but found themselves in competition with another early buyer. Rabeet noor, their agent at Intero Real Estate in San Jose, made a final counteroffer that was set to expire less than an hour later. The seller accepted US$1.725,000,000 bid, US$100,000.00 over asking. The couple closed their sale last month.

The bidding war was not as intense, but it was easier than having to deal with 10 wolves all at once.

This was a big help because the stock price of the company where his wife worked has been soaring. The couple were able to convince their mortgage lender that they could sell shares and make the 20% downpayment.

Syal admitted that the $8,500 monthly mortgage bill is a little high. However, he said it was a calculated gamble. They will refinance if borrowing costs decrease.

San Francisco

San Francisco’s recovery has been slower than Silicon Valley in part due to the fact that it was so badly affected by the pandemic. Demand for expensive condos downtown is particularly low. Houses that are well located, however, attract a lot more attention even before they reach the market.

Alexander Lurie, a Compass agent in San Francisco, held an informal open-house for a US$3.5M, three bedroom property in Marina District on the same weekend as the San Francisco 49ers competed in the NFL Conference Championships.

Five-hundred-and-fifty parties toured the newly renovated property, which had an expansive backyard and an open-plan floor plan. After all the interest, the seller raised the price from US$4.5million to US$4.5million.

Pandemic frenzy

Few homeowners want to sell because it would mean giving up their low-interest loans. Syal, a move-up buyer, is not selling anything. He said he would rent out the house he previously owned, and hold on to his 2.25 per cent loan.

San Jose, which is one of most expensive housing markets in the world, has seen its price fluctuate wildly in recent years. Prices peaked in 2020 after Covid sent buyers rushing to the suburbs. However, the market then cooled when rates increased last year. The recent buying frenzy was sparked by the drop in borrowing rates from October’s peak.

The Bay Area has seen a significant decrease in the number of homeowners leaving. Redfin’s data show that net outflows fell to just 26,000 homes in the fourth-quarter, a 13 percent drop from a year ago and half the amount of the peak reached in September 2021.

Silicon Valley is still producing millionaires that value living close to work. Desperation among buyers is returning, particularly in highly sought-after locations like Cupertino, Los Gatos and other prized places.

She’s been trying to get a husband and a wife who earn big salaries in tech to bid a bit higher. After a year, they decided to make a bid on the San Carlos house that they really wanted. The asking price of the 1,600 sq. ft. property with canyon views in San Carlos was US$2.35million. Wyss, the agent for the seller, told Wyss not to even try US$2.7million. It was sold by someone else.

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