Silicon Valley Real Estate Market Outlook for 2025

California’s Silicon Valley is one of the most competitive real estate markets in America. And recent predictions suggest that it could heat up even more in 2025, with rising prices and more sales.

A recent report from the California Association of Realtors (C.A.R.) showed that the South Bay and Silicon Valley real estate market remains highly competitive in 2024. This is largely due to a persistent supply shortage that has been going on for quite some time.

Looking forward, the latest forecasts suggest that the Silicon Valley real estate scene could heat up even more in 2025. The state’s Realtor association predicted an increase in both home sales and prices next year.

Silicon Valley Home Prices Rose in 2024

In October of 2024, the California Association of Realtors published an updated housing market report with data for the state as a whole along with major metro areas.

Among other things, this report showed that the median home sale price across Silicon Valley area rose by around 4% over the past year.

Researchers at Zillow reported an even bigger year-over-year increase.

According to Zillow’s data, the median home value in Santa Clara County, California reached an all-time high of around $1.6 million in October. That was a gain of 8.5% from a year earlier.

Home sales in the area have also increased over the past year, with more buyers entering the market.

Forecast for 2025: A More Active Housing Market

Recent predictions for the Silicon Valley housing market suggest that competition among buyers will remain high in 2025, marked by an increase in sales.

In its “2025 California Housing Market Forecast” report, the state’s Realtor association predicted that existing single-family home sales would increase by 10.5% in 2024, statewide.

Their forecast also calls for an ongoing rise in home prices. Specifically, the group expects the statewide median home value to rise by 4.6% in 2025, surpassing the $900,000 threshold by year’s end.

Note: Housing market forecasts represent an educated guess and should be treated as such.

Tight Inventory Conditions Remain

Inventory conditions have a lot to do with the competition level in this market.

The South Bay region, including Santa Clara County, has suffered from a real estate supply shortage for several years now. And the latest C.A.R. report showed that this remains a challenge for local buyers.

According to the association, Santa Clara County had about a 2.1-month supply of homes for sale during the fall of 2024. That was a slight improvement from a year earlier, but still very low from a historical standpoint.

Despite a general cooling trend within the California real estate market, home buyers continue to grapple with tight inventory conditions in some markets. And Silicon Valley is one of those markets.

Biggest Challenges for Home Buyers in 2025

In 2025, the two biggest challenges for home buyers will be: (1) the ongoing supply shortage and (2) the high cost of housing in the area.

The average home price in the Silicon Valley region is currently north of $1.5 million. That’s more than double the statewide average for California, and miles above the national average.

On top of this, the ongoing supply shortage often forces home buyers to compete fiercely with one another, with bidding wars being common.

• Get pre-approved: Mortgage pre-approval shows sellers that you’re financially ready to buy and gives you a clear budget to work with.
• Work with an agent: Choose a real estate agent who specializes in Silicon Valley. They can help you find listings quickly and make strong offers.
• Move swiftly: Homes sell quickly in Silicon Valley, often within days. Be prepared to view homes and make offers immediately, even on the spot.
• Go above asking: Be ready to offer more than the listing price, especially for desirable properties. It’s a common strategy in this market. Discuss it with your agent ahead of time.
• Limit contingencies: Consider reducing or waiving contingencies (e.g., financing, inspection) to make your offer more appealing. Just understand the risks that go along with this.
• Consider off-market opportunities: Ask your agent to look for homes that aren’t listed publicly yet. These “pocket listings” can reduce competition from other buyers.
• Be flexible with timing: Accommodate the seller’s preferred closing timeline. Offer a rent-back option if the seller needs extra time to move.
• Expand your search box: Look at different neighborhoods or smaller homes to stay within budget. Consider fixer-uppers if you’re willing to renovate.
• Be persistent: Be prepared for multiple offers and possible rejection. Keep looking and stay patient. The right home will come along.

Silicon Valley Regional Overview

Silicon Valley is a loosely defined region located in the southern part of the San Francisco Bay Area. It mainly encompasses Santa Clara County, along with portions of San Mateo and Alameda counties.

There’s actually no official boundary designation or definition for “Silicon Valley.” The term dates back to the 1970s and is used informally to describe a region known for its high concentration of tech companies and innovation hubs.

This region is also commonly referred to as the “South Bay,” due to its location relative to the city of San Francisco.

Silicon Valley is known the world over as a center for technological innovation and entrepreneurship. Its economy is primarily driven by the technology industry, with a focus on semiconductors, computer hardware and software, biotechnology, and internet technologies.

It’s also one of the most beautiful parts of California. That, along with the prevalence of high-paying companies in the area, is largely what attracts people to this region. It offers a mild Mediterranean climate, with an abundance of outdoor activities available year-round.

Major Cities in the Region

• San Jose: The largest city and considered the capital of Silicon Valley. Home to companies like Cisco Systems and eBay.
• Palo Alto: The birthplace of Silicon Valley, home to Stanford University and iconic companies like Hewlett-Packard and Tesla.
• Sunnyvale: Headquarters of Yahoo, Juniper Networks, and LinkedIn.
• Mountain View: Headquarters of Google (Alphabet) and many other tech companies.
• Santa Clara: Home to Intel, Nvidia, and Santa Clara University.
• Cupertino: Known as the global headquarters of Apple.
• Menlo Park: Headquarters of Meta (formerly Facebook).

Major companies headquartered in Silicon Valley include Apple, Google, Meta, Intel, Cisco Systems, and NVIDIA.