Hold on to your Patagonia vest and khaki pants, because the housing market in some of the nation’s hottest tech hubs is seeing.. shifts! That’s right, after a year of fierce competition and bidding wars, Redfin reports show that the market in places like San Jose and Oakland is cooling down faster than any other part of the country.
Even Austin Texas which was once the place to be, with its booming tech industry and red-hot real estate market, the tides have turned. Thanks to a tech sector in turmoil, looming recession, and consistently high mortgage rates, the Lone Star State has experienced the most rapid cooling of any U.S. housing market over the past year. Redfin’s data shows that the total supply of for-sale homes rose a whopping 140% year over year in February, with pending sales dropping 40%.
But it’s not just Austin feeling the chill. San Jose’s market has also taken a hit, with the typical home selling for a measly 0.6% above its asking price in February, down from 12% above asking a year earlier. Pending home sales have dropped 38% year over year, making it clear that the tech turmoil has had a major impact on the market. But here’s the important thing to note, there is STILL competition and offers are STILL landing over asking.
Even Seattle, another tech hub, has seen a significant decline in home sales over the past year. In February 2022, around 8% of homes sold for over asking price, but by February 2023, that number had plummeted to just 1%. Pending home sales have also declined by a whopping 40% year over year, as buyers worry about losing their jobs or being unable to keep up with mortgage rates.
Despite these challenges, sellers in the Bay Area are still holding strong. With inventory levels low and mortgage rates still relatively low, many homeowners are unwilling to give up their slice of the American dream. In fact, desirable homes between $1 million and $2 million are still receiving multiple offers and selling quickly.
So what’s causing this cooling trend in the tech hubs? Well, according to Redfin’s report, it’s due in part to tech layoffs, dwindling job prospects, and tech stock issues that have made buyers hesitant to invest. But don’t despair, not all housing markets are suffering the same fate. Markets in Connecticut, upstate New York, and the Midwest have actually held up relatively well over the past year, thanks to their relative affordability and lack of impact from tech sector turmoil.
So maybe this is what our crazy Bay Area housing market needed. Whether you’re a buyer, seller, or just curious observer, it’s definitely a trend to watch in the coming months.
