House Prices Drop Substantially in Silicon Valley
Here's more evidence that the housing market is cooling. The median home price in our nation's hottest market, Silicon Valley, has dropped a whopping 6.1 percent in just the past two months. The house market hasn't seen a decline like this in 3 years. And the dollar amount for that median home? The loss amounts to $50,000 in equity for the homeowner.
While the percentage drop may not look that bad, losing $50k from your pocket is a serious loss.
The median price for a single-family home is now $770,000. (Who the heck can afford even that price?) But the really bad news for folks who have bought into the market in the last year is that the current median price is only $10,000 more than last year's price at the same time. So, this price drop is really chewing up the equity in these homes! For that matter, if someone in Silicon Valley recently refinanced in order to pull equity out of their home, they could be in serious trouble when it comes time to renegotiate their mortgage. Their home could be worth substantially less than its financed for, given the current trend continuing.
Some experts say that this market resembles the market of the early 90's. Now, I was in that market, and I lost 25% of the value of my home. I had to sit tight (and hope that I wouldn't be asked to reappraise my home) for almost 10 years before that lost value came back to my home. In the end I was able to sell for a small profit over what I paid -- but it was very small. It was alsoa time in which foreclosures were up. We're already seeing some of that in parts of the US.
Back to Silicon Valley: in effect, the market there is turning towards a slightly more favorable position for the buyers -- although the prices will have to come down considerably before the affordability will put homes in the reach of most middle-class buyers.