SF Bay CA Real Estate

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More Townhouses Built Than Condos Or Single-Family

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Looking at the new homes built in Silicon Valley by the five largest builders in 2020 shows: 316 townhouses built, 230 condos built, and 148 single-family houses built.

Townhouse construction surpasses both single-family and condo construction. If smaller homes were wanted, condo construction might surpass townhouses, but most home buyers want 3+ bedrooms. With local cities having height restrictions, townhouses can be built to the same density as condos.

With so few new homes being built, Silicon Valley real estate market trends are likely to continue showing homes prices climbing faster than incomes.

Zestimate – Zillow Lost $304,000,000

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In 2018 Zillow announced “Zillow Offers” which gave home sellers an opportunity to sell their home directly to Zillow without listing their home for sale on an MLS. With the Covid-19 pandemic leading to restrictions on holding open houses it would seem that 2021 would be a great opportunity for the program. Zillow would use its Zestimate to begin the offer price and use an in-person visit to adjust for the cost of needed repairs.

Zillow’s Nov 2, 2021 earnings report and discussions indicate 2021 was not a great opportunity. The company posted a $304 million inventory write down in its third quarter and said that the total write down would be more than $540 million. Zillow will shut down its Zillow Offers division, leading to a 25% reduction in employees.

One of the eye-opening statements made in the company’s shareholder letter written by CEO, Rich Barton, and chief financial officer, Allen Parker, was “Our aim was to become a market maker, not a market risk taker.” The Zestimate apparently did not give them adequate short term future prices.

Does “market maker” bring up comparisons to the Hunt brothers effort in 1979 to become a market maker for silver which drove up the price of silver from $6 per ounce in early 1979 to $50 per ounce in January 1980?

Read more at Zillow Zestimate.

Tech Store, Fry’s Electronics, Is Shutting Down

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Marking a change in Silicon Valley that many residents don’t think about, Fry’s Electronics, is shutting down the 31 stores it has remaining. Many techies welcomed Fry’s Electronics when it opened and advertised: transistors, IC’s, soldering irons, Jolt Cola, and pantyhose(?).

Its closing emphasizes a change in Silicon Valley tech which was often pushed ahead by individuals and clubs building electronic tech gadgets to an industry dominated by, software, apps, and complex mass-produced hardware relying on ASICs. Rarely do techies use soldering irons today.

Silicon Valley has transformed many times since the Santa Clara Valley orchards were known for producing fruit. Silicon Valley real estate trends have been constantly impacted by technology and economic changes but demand has been driven up by more and more innovative people wanting to be together to create part of the future. Working remotely puts different rules on whose ideas are shared and how much they are shared.

Renting Out Your Condo or Townhouse

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Assembly Bill 3182 (Civil Code Section 4740 and Civil Code Section 4741) limits the restrictions common interest developments may impose on offering units for rent. It took effect Jan 1, 2021.

  • A common interest development may cap the number of rentals to 25% or more.
  • ADUs and junior accessory dwelling units (JADUs) can not be included in the cap.
  • The cap must not end the right of an individual owner who was renting out prior to Jan 1, 2021.

A JADU is typically an area within a home which has been allocated to house a separate individual or family. It may contain a mini-kitchen which uses plug-in appliances. Thus a condo or townhouse owner can rent out part of his unit irrespective of rental restrictions if he meets the JADU requirements.

View details of rent restrictions for common interest developments.

Learn more about ADUs and JADUs.

Real Estate Commission

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Real estate agents have been creating new real estate commission plans. JLee Realty has recently implemented a 0% real estate listing commission plan. Their expressed goal is to attract as many buyer agents to their listings as possible.

If their own buyer agent submits a successful offer, they reduce their listing commission to zero percent. JLee Realty will not receive any more commission if their seller accepts an offer from JLee Realty than if a purchase offer is accepted from any other brokerage.

Furthermore JLee Realty is not offering any enticements for a buyer to drop their own buyer agent and use a buyer agent from JLee Realty when they make an offer.