Buyers who are desperate for houses in Silicon Valley now have a new strategy. It has recently become more common practice to bait property owners with high offering prices. Buyers hope to use the promise of a tidy profit, to convince owners to sell.
This new development has been spurred on by demographic changes in Silicon Valley. What were once working-class neighborhoods now contain properties fetching over a million dollars on the real-estate market. It is unsurprising that these house owners would be willing to sell their properties, which they had acquired at a mere fraction of the new selling prices.
Property buyers in Silicon Valley must be adaptable and aggressive. The official pool of for-sale properties is growing smaller, as population rises. In response, buyer behaviors are adapting to the new market climate. According to one online report, median home prices in Silicon Valley are $985,000, and average sales prices are $1,278,010 as of August 2016. This disparity suggests a growing margin between the original house prices, and the amount those houses now fetch.
There are several benefits to the new approach of preemptively offering to purchase not-for-sale houses. Benefits include: the ability to streamline what was once a highly time-consuming procedure, increasing accessibility for buyers, and allowing sellers to turn unexpected, large profits.
According to one New York Times article, this trend is partially a product of the digital age. In the era of instant gratification, the "six month slog" to procure a new house is less appealing than ever before. Gentrification (by way of Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL) employees) also plays a huge role in this unique housing boom. With new campuses underway, the number of technology employees in Silicon Valley (and neighboring areas, like Redwood City and Palo Alto) can only rise.
In response to the buyers' initiatives, property owners are adapting as well. There has been a rise in a corresponding trend of "soliciting." Solicitors are property owners who notify buyers-at-large of their willingness to sell. In doing so, they give the buyers the option of bidding up to a final selling price. For long-time residents of now-trendy neighborhoods, homes are nothing more than fluid investments. The traditional outlook where homes are treated as items of permanent ownership and attachment is becoming less popular.
Real-estate companies like Redfin seek to meet the niche needs of this new population. Their strategies include cold-calling prospective home-owners who have not listed themselves as sellers. According to the same New York Times article, they also help buyers craft "targeted queries." These efforts reveal buyers' commitment to detail and the highly demand-driven exchanges of this boom. In Silicon Valley, it's a buyer's market.
However, not all residents welcome this unique real estate boom, and the opportunities it brings to make quick money. Some residents are happy where they are. These residents find the cold-calling real estate agents irritating.
Interestingly, real estate experts predict that similar buyer/seller dynamics to the ones found in Silicon Valley will soon appear in many industrial hubs across the nation. In particular, the hubs currently experiencing increases in wealth in conjunction with influxes of newcomers who need places to live are especially likely to be affected.