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| Each week, the Silicon Valley Association of Realtors (SILVAR) shares local housing data, sales trends and other real estate-related topics. This week’s column provides insights on California and Silicon Valley’s economy and real estate markets from Santa Clara County Property Tax Assessor Larry Stone, who was the guest speaker at a recent association event. |
Those house hunting in Silicon Valley over the past two years have faced the region’s most unaffordable market in nearly 50 years, according to Santa Clara County Property Tax Assessor Larry Stone.
High demand and low supply pushed up the county’s median home price above the $2-million mark for the first time last May, and the sale of homes priced $5 million and over jumped by 18.5% compared to the previous year, Stone said. In neighboring San Mateo County, the median price rose to $2.4 million during the same period. The two counties are the only ones in the state where the median home price has surpassed the $2-million mark, according to data from the California Association of Realtors.
Stone doesn’t expect to see prices drop anytime soon, either. Stone said he anticipates that robust demand will continue to drive home prices statewide, and 2025 could see more workers moving elsewhere due to the ongoing housing shortage.
“California’s housing crisis is more a supply problem than an affordability problem,” Stone said.
Job market, population declines
Of particular concern, he said, is the state’s labor supply and population decline.
Since 2021, employment in the state has grown a meager 2.1% compared to 4.2% nationwide, Stone said. The state’s labor force has declined by 197,000 workers, driven largely by the serious housing shortage.
Locally, Silicon Valley’s job growth has been underperforming compared to the rest of the state and nation during the post-pandemic period, Stone said.
Bay Area News Group reported this month that California job totals in 2024 increased by just 1%, according to data from the Employment Development Department. The Bay Area job market, in the same period, grew only 0.2%.
The region saw the loss of about 18,800 jobs from its 20 largest tech companies in 2023, and experienced another 13,000 job losses from its labor force of about 1.7 million in the first half of 2024, according to data from Joint Venture’s 2024 Silicon Valley Index.
Those Silicon Valley workers who left, according to Stone, took about $29 billion of taxable income with them.
Real immigration reform allowing increased legal immigration combined with robotics and AI is the only solution to meet our future workforce demands.
Larry Stone, Santa Clara County Property Tax Assessor
In addition, the absence of big commercial leasing deals, and the continuation of hybrid and remote work, have impacted the office and industrial markets. He indicated downtown San Jose’s vacancy rate was 35% in the fourth quarter of 2024. San Jose has a 47% return-to-office rate, the lowest of the 35 major metropolitan areas.
“In my opinion, real improvement in office vacancy levels won’t materialize before 2026,” Stone said.
Immigration, robotics, AI
While the data may paint a bleak picture, Stone said it is far from doom and gloom for the California or Silicon Valley.
“California is one of the nation’s economic powerhouses,” Stone said. “With high incomes, high economic output and globally significant industries, California remains the fifth-largest economy in the world, contributing 14% to the nation’s GDP.”
Locally, even as venture capital investment has slipped, he noted 80% of tech research and development is based in Silicon Valley.
“Long term, I believe the outlook for the Silicon Valley economy is bright. Electric vehicles and battery technologies, artificial intelligence, and clean energy will keep Silicon Valley high on the list of economic success for some time to come,” he said. “Silicon Valley’s economy is structured to resist long-term declines in economic activity. Big tech has a special kind of resilience because innovation is the driving force behind our success.”
Ultimately, California’s outlook for 2025 hinges on the performance of the region’s tech giants and the domestic and international policies of the Trump administration, Stone said.
“Real immigration reform allowing increased legal immigration combined with robotics and AI is the only solution to meet our future workforce demands,” Stone said. “Trump’s anti-immigration posture will come at a significant cost to Silicon Valley and California employment. California is a large, diverse economy. That diversity is a strength because it creates a broader economic base.”
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
