Real Estate Trends – House vs. Condo

Perhaps now is a particularly good time for first time home buyers to buy a condo.

In my 2021/01/09 webinar & my 2021/01/10 Chinese webinar I pointed out a difference in Silicon Valley real estate trends for houses vs. real estate trends for condos. House prices have been climbing a little faster than condo prices.

Santa Clara County House Prices (per sq.ft.)
Santa Clara County Condo Prices (per sq.ft.)

The incoming Biden administration has talked about a $15,000 tax credit for home buyers. The home prices in Silicon Valley are high enough that the credit will be more meaningful for condo buyers. With the difference in price between houses and condos recently increasing, and a potential tax credit driving up demand, buying a condo now could prove to be an even better than the normal choice for first time home buyers. Rent vs. Buy considerations, and low mortgage interest rates, make owning any home significantly better than renting for most Silicon Valley residents.

Condo owners are typically younger and more mobile than the average home buyer. The spread in house vs. condo prices is probably a short term reaction to the pandemic.

Very long term trends are still likely to favor homes with yards over homes without yards. New construction in Silicon Valley is nearly always townhouses and condos because of the high cost and limited availability of land. The expected increase in homes with little or no yard probably won’t keep up with demand, so all prices are likely to rise, but the number of homes with yards is likely to decrease as older housing is replaced with newer housing. Your own private outdoor space is slowly headed towards becoming an expensive luxury.

Buying a condo now should be an excellent path towards owning a bigger home in the future.

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