Climbing the Real Estate Peak: Are we there yet?
It’s no surprise that real estate in the Peninsula has been booming over the past few years, and Redwood City is no exception. A number of factors may have contributed to its exceptional increases, but some of the most likely factors include the rapid downtown development and Redwood City’s position at the heart of the Peninsula. Here is a recap for Redwood City real estate.
Redwood City has seen an increase in median price of nearly 17% in 2015. That is quite an increase when compared to the San Mateo & Santa Clara County median price increase of 12.4%. Even high-end neighbor Palo Alto experienced growth of only 10.6% over the same time period. Additionally, Redwood City has seen an increase of 83% in median price from 2011.
So where does that leave us in the real estate cycle? Some financial analysts think we are heading right into year seven of the typical cycle. If that theory holds true, we can pinpoint the last peak in median prices for Redwood City in April 2008. And the peak for San Mateo & Santa Clara counties combined in March 2008. So a seven year cycle, barring any extraordinary circumstances, puts the next peak for median pricing in the Peninsula this spring.
The other side of the argument is that there are too many factors preventing the typical cycle from running its course. Inventory levels (homes for sale) are at an all-time low across nearly every city in the Peninsula. Redwood City inventory is down another 14% from last’s year record low.
The local economy is strong, unemployment is near an all-time low, and buyers are flush with cash. So what could possibly cause a change in the market? The biggest factor is sellers flooding the market with new listings as they fear we are at the top of the cycle. A surge in inventory could begin to satisfy any pent up demand and cause a flattening of the market. Further panic listing, combined with increases in interest rates, uncertainty in the stock market, and buyers questioning if they should buy if we are at a peak, could all contribute to a larger correction in the market – farther into the future.
My advice: Sell now if you’re planning to do so any time in the next couple of years. Trying to time the market’s projected peak is nearly impossible – and those who try very often end up falling off a cliff.
