Geek's Number Talk: Where’s all the housing?

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A lot of Bay Area cities are blaming each other for the housing shortage we’re all experiencing, but the truth is we aren’t building enough new housing anywhere, and we haven’t for a while.

Permits were issued for 119,636 new homes statewide in 2021 – just two thirds of the projected need – and this year it’s expected to be even less, with only a fraction in Santa Clara County. If this comes to pass, it will be the 30th year out of the past 35 that California has failed to meet housing production goals. And even permitted projects face false starts and stall outs due to shortages of labor and materials, as well as ever-present community pushback.

Bottom line: Unless hundreds of thousands of new homes are built this year and for many years thereafter, Bay Area home prices will continue to rise, and this will continue to be a seller’s market.

Chic vs. Geek: Stability in Uncertain Times

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Many homebuyers are hitting the pause button due to rising interest rates, inflation, and other economic fluctuations. But waiting will only make the price tag higher as long as Silicon Valley home values remain immune from market fluctuations. Let’s take a look at a few reasons why this is true:

CHIC (PEARL)

Wealth: Silicon Valley has the highest level of income and wealth inequality in the U.S., and it increased dramatically during COVID. That means fewer people can afford to buy, and those who can are ready to spend big sums to get what they want.

Jobs: Silicon Valley’s unemployment rate fell to 2.9% at the end of 2021, and tech jobs are now 5% above pre-COVID levels. That means more demand from well-paid workers, and it only deepens as cities continue to miss their housing production goals.

Employer Confidence: Google, LinkedIn, Apple, Amazon, Facebook/Meta and other tech giants made major investments in Silicon Valley real estate in 2021, which means those well-paying jobs aren’t going anywhere, and neither are the service industries that support them.

GEEK (KEVIN)

Investment Housing: The Santa Clara County Housing “Affordability Index” stands at 22%, which means less than 1 in 4 residents can purchase a median priced home. So it should come as no surprise that the share of homes sold for investment hit 9.5% in 2021.

Strong Fundamentals: The housing market boom we’re seeing now in Silicon Valley isn’t a “bubble” like 2007. With the third highest concentration of “equity rich” homes in the country, our region is fundamentally sound and hard to crack.

Future Demand: Over 4.5 million Millennials will turn 30 over the next few years and look to increase wealth through homeownership. And more than a decade of under-building, Capital Gains Tax regulations, and Prop 13 protections are sure to sustain high demand — and prices — for years to come.

An Urban Oasis

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Welcome to an Urban Oasis! This spacious condo with new floors, fresh paint, and plenty of natural light is conveniently located in the heart of Silicon Valley near major freeways, high-tech companies, and trendy shopping in Downtown Sunnyvale. It’s also close to nature, with a greenbelt of parks and trails and refurbished Fair Oaks Park in the neighborhood.

609 Arcadia Terrace #204, Sunnyvale, CA 94085

2 Beds | 2 Baths | 1,160 sqft | $899,000

Open this weekend: Fri 9am-1pm, Sat & Sun 1-4pm