California’s 2020 Housing Market Forecast

California real estate market retreated slightly during November. Our updated report covers important stats including home prices, sales, and recent home sales trends from CAR, NAR,  Zillow and more. And we’ll take a look at the forecast for 2020.

CAR reports a slight decrease in the home prices and sales during November. However, we are moving deep into the off season, and buyers simply aren’t as active despite low mortgage rates and the recent plateau in home prices.

This is the 5th straight month of sales above 400,000 units (seasonally adjusted). November’s sales totals fell 0.3% from the October sales numbers (404,240), yet this is up 5.6% from last November’s total sales of 381,690. Realtors feel it was a good second half of 2019.

The median home selling price was $589,770, a drop of 2.6 % from October yet it that is still up 6.4% from November 2018.

Year to date sales are down 1.9% in November.

California Home Sales

In the San Francisco Bay Area, home sales grew 4.6%. Sales in the Bay Area itself saw sales drop 4.8%. Tehama saw the biggest growth in sales at 69.2%.

Year over year, median home prices have risen significantly during a troubled economic period. Southern California had a 7.5% rise, the Central Valley up 6.3%, Central Coast up 3.3%, while the Bay Area had only a 2.2% rise. The Bay Area housing market’s lower yield reflects the uncertainty in the tech sector.

Los Angeles County has seen prices rise 7.4% over the last 12 months, yet home prices fell $52,000 from October. San Diego county home prices rose 1.1% or $7000.

San Francisco saw it’s hot sales numbers cool significantly in November, dropping 20%. Home prices there dropped $31,000 or 1.9% in November. Marin and Napa counties saw price reductions of 9% or more from October. Sales in NAPA plunged 39%.

The Real Story of California Real Estate

The real story of California’s housing market is a persistent lack of supply, something that may never be remedied. That means overall home prices and perhaps rent prices might persist high as well.

Active listings fell for the 5th straight month, down 22.5% from last November. This was the 3rd consecutive double-digit drop and the largest since April 2013. Unsold inventory index dropped from 3.7 last year to this November’s rate of 3.0.

The sales to price ratio stands at 98.4%, up.5% from last November. Days to sell dropped to 25 days (-3 days).

A Paradox of Good and Bad

Given the low interest rates and corporate withdrawal of capital expenditures, it’s not surprising to see low job growth in tech, manufacturing and banking & finance.  Construction and administrative job growth was strong. Unemployment has fallen now to a record low 4.0%.

Yet homelessness and extreme housing costs are making life tougher for most Californians, particularly rental tenants.  Housing construction restrictions and other regulations are weighing very heavily on the quality of life in the Golden State and raising rent prices.

In what some expert economists forecast to be bearish times out west, it seems it’s going okay though.  If some projections of a growing US economy from 2020 onward come true, home prices may roar higher in 2020.

November Employment Numbers Were Excellent

Nationally, the jobless rate remained at a very low 3.6% while wages climbed 3%.  The California job market is still very good. Wells Fargo reports a gain of 23,000 jobs during October (up 1.8%) , and up 320,000 jobs over the past year.

California Association of Realtors believes low mortgage rates are the cause for this 3rd consecutive month of sales YoY, although prices over the last few months have remained the same.

The California Association of Realtors reports that sales of home priced between $500k and $1 Million rose about 15.5% on average. Sales under $300k dropped strongly (-14.7%) and homes above $2 million dropped 3.2%. Condos prices rose to $473,000.

The California Association of Realtors reports that sales of home priced between $500k and $1 Million rose about 15.5% on average. Sales under $300k dropped strongly (-14.7%) and homes above $2 million dropped 3.2%. Condos prices rose to $473,000.

Will California Recover in 2020?

Zillow says September’s median prices in California came in at $554,000 (which is up $4000 from October).  They had forecasted prices would only rise another $9k by next August.  If the economy should heat up, as some economists are now suggesting, it would create price growth of much more than $9,000.

Tight Conditions and a Rising Rent Environment

Despite lower mortgage rates, and flat home prices, it is likely California rents will rise. Unlike those in the national housing picture, Californians have solved the buy VS rent dilemma, by continuing with renting.  This is fueling a surge in build to rent developments.

Given the ultra-high real estate prices, first time buyers simply can’t come up with the downpayment or manage the lofty mortgage payments.  The rental market seems secure for landlords and investors. Rent grew slightly overall in the state.

Bay Area Real Estate: Where Are We Heading?

The national real estate market has been strong for over a decade. Although there have been some concerns about a real estate bubble, current real estate trends show that market fundamentals remain solid.

Low unemployment, a steady economy, and low interest rates are good signs for buyers and sellers. However, high home prices and a lack of available inventory have kept some entry-level buyers out of the market. Housing affordability is a major concern, and states are starting to address it through a variety of rent reforms.

Where are we in the real estate cycle?

Traditionally, real estate follows a cyclical pattern -- but the current period has been hard for economists to predict. This has led some people to wonder if we're facing another housing crash.

Fortunately, the fundamentals this time around are different from those in the mid-2000s. The economy still shows signs of steady growth. The gross domestic product (GDP) is increasing slowly but maintaining its upward trajectory. In the second quarter of 2019, GDP grew 2%. The unemployment rate remains at historic lows and, while wages have been slow to catch up, they've started to rise. That has increased consumer confidence and spending. 

Builders also remain optimistic about the current state of growth. The National Association of Home Builders' monthly survey of builder confidence continues to show that builders see steady traffic for new homes and that their concerns are centered on labor shortages and the price of materials. However, one real estate trend to keep an eye on is that some major homebuilders, such as Lennar (NYSE: LEN), are reducing the amount of land they own. 

Recessions tend to occur regularly, and statistically, another one could happen soon. A Sept. 2019 survey from YouGov showed that 46% of Americans think a recession will happen in the next two years -- that prediction could certainly shape real estate trends into the future. In that same survey, respondents indicated that they see real estate as one of the safest investments when compared to the stock market. 

Fears of a recession may have also led to a dampening of the Fannie Mae Home Purchase Sentiment Index, which rose through most of 2019 but has started to drop. This is partly due to concerns over the ongoing trade discussions with China. Housing activity also tends to fall in election years.

Where real estate prices are rising the fastest

Prices have outpaced sales in most markets. In a recent forecast, CoreLogic projected that prices will rise by 5.8% annually until August 2020. While this indicates a strong upward trend, it's still lower than the double-digit growth seen across many markets in previous years. This may provide some relief for buyers looking for an entry point. It may also prompt some owners to stop waiting for the market peak and consider selling. 

Lawrence Yun, chief economist of the National Association of Realtors (NAR) has predicted that home sales will rise in 2020. The NAR forecasts that home sales will rise by 3.4% in 2020. Inventory of homes for sale has remained below statistical averages. Traditionally, a six-month supply of inventory represents a balanced level of supply and demand. In the past several years, overall inventory has remained low and is particularly strained at the entry-level end of the market. 

Certain markets where prices hit new highs, such as Seattle and San Francisco, have seen prices recalibrate over the past year. These markets have seen a population uptick due to the growth of the tech employment market as large companies such as Amazon and Facebook take up more commercial space and increase hiring. Overall prices were up most dramatically in top-tier coastal markets over the past five years. Las Vegas, Phoenix, and Tampa have been the top three growers for most of 2019, according to the S&P CoreLogic Case-Shiller Home Price Indices. Top market rankings shift often as people seek opportunities in secondary markets. 

The 2020 report from the Urban Land Institute pegged Austin, Texas as the best market for real estate investment. Raleigh-Durham, N.C., and Nashville rounded out the top markets. While home prices are rising in these cities, they're lower than those in top-tier coastal markets. 

High prices have also led real estate investors to seek new opportunities in smaller markets. With foreclosures and short sales at very low rates in many areas, there are fewer chances for real estate investors to find solid fix-and-flip real estate inventory in large cities.

The forecast for home building

While building has mostly bounced back from the Great Recession, it hasn't reached the highs seen in 2007. This is good news on one hand, because it means there's not an issue with oversupply. On the other hand, this lack of building activity has contributed to the lack of inventory and the steady increase in prices. 

Construction has increased across the Sun Belt. High prices for land in California have led some homebuilders, including Toll Brothers, to concentrate on growing markets in Texas, Florida, Nevada, and Virginia.

Builders are struggling with construction concerns like the lack of skilled labor and high lumber prices. 

Looking to the future

While it's impossible to know the exact direction the market will take, demographic trends show that millennials are poised to be the dominant force in housing for the next decade. Just as baby boomers changed housing, leading to the growth of suburbs, millennials have created their own real estate trends, spurring the development of walkable communities with good public transit that the Urban Land Institute dubbed "hipsturbias." 

While the trade war, economic uncertainty, and an election year may put a damper on some growth in 2020, overall real estate trends are showing that demand for housing is still strong.

California June Home Prices Up Marginally, Sales Down Significantly

- Existing, single-family home sales totaled 389,690 in June on a seasonally adjusted annualized rate, down 4.2 percent from May and down 5.1 percent from June 2018.

- June's statewide median home price was $611,420, virtually unchanged from May and up 1.4 percent from June 2018.

- Year-to-date statewide home sales were down 5.9 percent in June.

- C.A.R.'s 2019 California housing market forecast was revised upward to 385,460 single-family home sales and a median price of $593,000.

After rebounding in May, California home sales fell below the benchmark 400,000 level in June as sales declined from both the previous month and year, the California Association of Realtors said today. 

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 389,690 units in June, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

June's sales figure was down 4.2 percent from the 406,960 level in May and down 5.1 percent from home sales in June 2018 of 410,800. Sales fell below the 400,000 benchmark again after rebounding in May. Sales have been under the benchmark for 10 of the past 11 months.

"With softer price growth and interest rates at the lowest levels in nearly three years, monthly mortgage payments on a median-priced home have fallen for four straight months. This allows homebuyers to save hundreds of dollars a month on the same home or to potentially consider a slightly more expensive home for the same monthly cost," said C.A.R. President Jared Martin. "Combined with the long-term benefits of homeownership on personal wealth and quality of life, 2019 is a good time to purchase a home for the long haul." 

While the median price set another record in June, the increase was tempered. June's median price was $611,420, essentially unchanged from $611,190 in May and up 1.4 percent from $602,770 in June 2018.

"With low rates supporting sales and elevating home prices in the last few months, the market outlook has shown some improvement since the first quarter," said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. "As such, we have revised our 2019 forecast upward for home sales to reach 385,460 and for the median price to hit $593,000, from the previous forecast of 375,100 and $568,800, respectively."  

US Home Sales Data Reports Homes Prices Are No Longer Rising

There are growing signs that U.S. home prices are no longer rising. If this is indeed the case, now is the time for sellers or prospective sellers to take a good look at the state of housing markets around the country.  To make smart decisions, home sellers as well as buyers need to find out whether home price gains are simply slowing or whether housing markets are actually topping out. 

An excellent publication,US Homes Sales Report, published by real-estate data firm Attom Data Solutions, gives a detailed look at conditions in major U.S. housing markets. This quarterly report provides data on the actual gross profit that sellers pocketed in 124 housing markets nationwide.  It tracks every home sold in that metro and compares the price to what the seller previously paid for the house. An average is then taken for all the homes sold in that quarter. The result is the average gross profit in each metro before commissions are deducted.

This data is extremely useful for prospective sellers because it tells them what kind of profit they can expect should they decide to sell their home. Sellers need this information to determine if they will have enough net profit, whether they’re looking to trade up or downsize.

We compiled data from Attom Data's US Home Sales Report for the first quarter of 2019 into a table highlighting 12 major U.S. markets and what they reveal about home sales at four different points in time. These 12 major metros were chosen for geographic diversity.

The percentage figures in the far right column show what the average gross profit was for homeowners who sold in the first quarter of 2019.  For example, in what had been the hottest market of them all — San Jose, Calif. (Silicon Valley) — homeowners who sold in the first quarter of this year realized an average gross profit of 84%. Yet had they sold a year earlier, the average gross profit would have been 103%. So the average gross profit on homes sold in San Jose has slipped almost 20 percentage points over the past year. In fact, the gross profit figure in this metro peaked at 114% in the second quarter of 2018.  

The second-hottest market in the nation was probably Seattle. Owners there who sold last quarter had an average gross profit of 63%. A year earlier, their profit would have been 72%. Gross profit in Seattle peaked at 78% in the second quarter of 2018.  Like San Jose, the average gross profit in Seattle has declined for three consecutive quarters. 

In all except two of the metros covered in the table, homeowners would almost certainly have been better off had they sold a year ago rather than in this year's first quarter.  

Yet what if these quarter-to-quarter comparisons are not trustworthy, since so much depends on the average length of time that sellers owned their property? That is a fair objection.  But consider this: Attom Data Solutions also publishes a quarterly report that calculates the average time sellers held their property. For the nation as a whole, the average tenure of ownership for sellers in the first quarter of 2019 was eight years. A year earlier, it was 7 ¾ years. We can reasonably conclude, then, that many sellers in the first quarter of 2019 bought their home around 2011.  

For most major metros, average prices in 2011 were lower than in 2010, when many who sold in 2018 bought their home. You might then assume that the average gross profit for the sellers in 2019 should have been greater than those who sold a year ago. Yet as the table shows, that did not happen in 10 of the highlighted 12 metros.

Five other key measures suggest that housing markets could be topping:

•     Home sales have been declining in many major metros

•      Listings of homes for sale have soared in the hottest markets

•      Reductions in asking prices have been increasing

•      Bidding wars in hot metros a year ago have all but disappeared

•     Standards for underwriting mortgages have plunged in the past year

Real estate brokerage Redfin's most recent housing data is revealing. According to Redfin, the volume of home sales has been declining in major metros for almost a year. For example, many hot California metros showed double-digit sales declines in February and March from a year earlier.  In affluent Orange County, first-quarter home sales fell 20% from a year earlier and were the lowest since the housing collapse began in 2008.  Though not dangerous by itself, the weakness in home sales is a red flag.

Worse, the number of homes for sale is soaring in some of the hottest markets.  In March 2019, for example, listings were up 104% in San Jose from a year earlier, 83% in Seattle, 30% in Portland, and 24% in San Francisco.

Tumbling home sales along with substantial growth in the number of listings is a dangerous combination. If this trend continues, many sellers will be forced to lower their asking price.  This has already occurred in more expensive parts of Los Angeles and Fairfield County, Conn. Reductions in asking prices have also increased in New York City. Grant Long, senior economist at New York City online real estate marketplace StreetEasy, predicted in March: “When the inevitable wave of new inventory hits the [New York City] market this spring, interested buyers should expect to see an uptick in price cuts as the market forces ambitious sellers to accept reality.”

A fourth warning sign: In early May, Redfin reported that bidding wars — where sellers receive multiple offers on their property — have plunged across the U.S. in the past 12 months. In April 2018, Redfin agents had multiple offers on 60% of the homes they were showing. That figure collapsed to 15% by April 2019. Even the hot San Francisco Bay Area market saw a sharp drop in multiple offers, to 22% from 75%.  

Fifth, the standards for underwriting mortgages have sunk almost as low as what existed during the height of the property bubble madness in 2005-07. Because of these relaxed underwriting standards, about 3.3 million mortgages were originated between 2014 and 2018 that would have been denied under the tighter standards, the Urban Institute reports. Perhaps Fannie Mae and Freddie Mac, the dominant players in U.S. mortgage markets, decided that unless they lowered their standards, some housing markets might suffer due to a lack of qualified buyers.

Advice for home sellers and prospective sellers

A seller with an active listing do should consider that their local market is softer than they believe and that their asking price is too high. If the traffic of prospective buyers has been slow and the home has not sold for several months, they should talk with their broker about a price reduction. In a weakening market, this may be the only way to sell the house.

What about homeowners who postponed listing their house as prices rose? They need to reconsider this decision. If they believe that home prices may be heading lower for more than a brief period, the prudent action may be to put the home on the market now — before their market weakens further.  

Keep in mind that I am not saying home prices are about to plunge as they did in 2008-2011. Yet prudence would suggest that wise homeowners adjust their expectations and plans, in order to deal with any changes in their local housing market.

9 US Housing Markets Where Home Prices Have "Likely Peaked"

Earlier this month, the real estate research team at Zillow published a report that showed U.S. home prices dropped from March to April 2019. That was the first month-over-month drop in home values since February of 2012.

According to the company’s data, a typical home in the U.S. now costs around $226,800. That was the median value, nationwide, at the time this report was published. (Of course, some real estate markets are much more expensive than that.) 

As of summer 2019, home prices in many housing markets across the country are now slowing, leveling off, or even dropping.

Home Prices Have ‘Likely Peaked’ in These Cities

The report also stated that house values in 14 real estate markets across the country — including Philadelphia, Boston, San Francisco and Seattle — have already reached their price peaks. 

According to the press release that announced these findings:

“Home values have likely peaked in Los Angeles, Philadelphia, Houston, Miami, Boston, San Francisco, Seattle, San Diego, St. Louis, Tampa, Baltimore, Pittsburgh, Portland and San Jose.”

It’s not surprising to see some of these cities singled out in the report. Back in March, we mentioned that home prices in Seattle appeared to be coming down from a peak. And Seattle was one of the cities mentioned in the Zillow report.

In fact, cooling trends can be seen in many of the other housing markets on this list. A couple of examples: Following a year of steady gains, home prices in Philadelphia have pumped the brakes. The median house value in San Jose, California (another city on the list above) has dropped as well.

A Closer Look at These Housing Markets

We looked at some of the major cities where Zillow said home prices had peaked, to get a better sense of what is happening in those housing markets. Here are some highlights:

Houston, Texas

According to a recent report, most of the homes listed for sale in Houston end up selling below their original list prices. This shows how much the local housing market has cooled, since its red-hot days a few years ago. Home-price growth in the area has slowed down as well. 

But it might be a bit premature to say that the Houston housing market has peaked. Current conditions will likely produce smaller home-price gains in 2020, compared to the past couple of years. But significant population growth in this metro area could put upward pressure on house values well into next year.

Los Angeles, California

Following a year of modest growth, home prices within the Los Angeles real estate market have screeched to a halt. According to a May 2019 update from Zillow: “Los Angeles home values have gone up 2.2% over the past year and Zillow predicts they will fall -0.1% within the next year.” 

Similar cooling trends can be seen in other parts of Southern California. In this part of the country, housing affordability is a major contributing factors. 

In many of these California real estate markets — particularly the major coastal cities — a person earning an average income for the area can scarcely afford to buy a median-priced home. This has reduced housing demand and, in turn, led to smaller price gains.

Miami, Florida

According to an April 2019 report from Knock (the home trade-in company), Miami’s housing market had the highest percentage of homes sold below the original listing price during Q1 2019. At that time, “88% of homes sold below original list prices,” the report said. 

This is just one indicator that suggests the Miami real estate market is cooling — and starting to favor buyers over sellers. Home prices in the area are expected to level off between now and 2020. 

Inventory has a lot to do with this. The Miami housing market currently has more supply (homes listed for sale) than most other major cities across the country. This gives buyers more options to choose from, but it also takes some of the steam out of home-price appreciation.

Portland, Oregon

Portland was one of the western housing markets that appreciated rapidly after the recession. Limited inventory and strong demand drove home prices up at a rapid pace. 

But a lot has changed since then. Portland was also one of the first western real estate markets to go through a cooling phase, which you can see clearly in the chart below.

House values in this market began to level off in 2017, and the median home price has actually declined a bit since then. So it’s safe to say that the Portland housing market has already peaked — at least in terms of pricing.

San Diego, California

As a former resident, I can tell you that San Diego is a nice place to live. The weather’s great almost year-round, and there’s plenty to see and do. That’s why the city’s population continues to grow at a steady pace.

But the San Diego real estate market is expensive, and it has only gotten pricier over the past few years. 

Consider the evidence: The median home value in San Diego rose from around $370,000 in 2012 to $633,000 in 2019. As a result, there are fewer home buyers with the means to make a purchase. And this had led to a slowdown in price growth. So it’s no surprise to see the San Diego mentioned among the housing markets that have “likely peaked.”

San Francisco, California

Will one of the nation’s most expensive real estate markets actually depreciate between now and 2020? It seems possible. 

After years of steady home-price gains, the San Francisco housing market has cooled down. Some forecasters are now predicting that house values in the city will level off, or even drop a bit, over the next year.

But don’t let that fool you. The San Francisco real estate market is still highly competitive right now. (Is it ever not?) Properties in the city are selling fast, due to limited inventory and steady demand from buyers.

San Jose, California

What can we say about San Jose? This real estate market is an anomaly in more ways than one. Here’s the short version: Tech workers have flocked to the Silicon Valley for high-paying jobs at places like Apple, Facebook and Google. And home prices in the area have skyrocketed as a result.

A lot of residents outside the tech industry, however, have been priced out of the housing market. For instance, a recent report from Trulia showed that San Jose is the toughest market in the US for educators.

Over the past few years, inventory shortages within the San Jose real estate market led to bidding wars and offers well above the asking price. The city’s median home value shot up to $1.1 million in October 2018. 

But prices can only rise so far before buyers start to pull back. And that’s exactly what is happening in San Jose and surrounding areas. Home prices there are now falling, as inventory accumulates. It seems that the bubble has burst.

Seattle, Washington

The housing market in Seattle suffered from a severe inventory shortage from 2015 to 2017, one of the worst in the country. And while inventory has increased since then, it’s still pretty tight. 

This supply shortage — combined with strong demand from investors — sent prices soaring. Seattle’s median home value shot up from a fairly affordable $350,000 in 2011, to a whopping $750,000 in 2018. As you might have guessed, this has led to affordability issues for a large segment of the populace. 

A predictable pattern followed: Buyers pulled back, and this drop in demand had a cooling effect on house values. The median home price in Seattle has dropped over the past few months, and the team at Zillow predicts a continuation of this downward trend into 2020.

Tampa, Florida

The Tampa real estate market has also seen an increase in the number of homes selling below the original list price. According to the Knock report mentioned earlier, about 78% of properties sold during the first quarter of 2019 went for less than the list price. 

The Tampa housing market is also experiencing much slower price growth today, compared to recent years. Following a gain of 5.5% over the past 12 months, Zillow predicts the median home value for Tampa “will rise 1.6% within the next year” (into May 2020).

Silicon Valley Real Estate Market Begins to Cool...A Little

In Silicon Valley, the country's most notoriously overheated real estate market, things are starting to cool off ... a little. 

The area saw the biggest decline in median home prices in the country last month. Homes are also taking longer to sell, with inventory of available homes for sale slowly increasing over the past year, Realtor.com found. 

But the sky is hardly falling. Silicon Valley and the larger Bay Area still remain among the hottest real estate markets in the country, says Danielle Hale, chief economist for Realtor.com. "Time on the market is still relatively short compared with the rest of the country." 

Still, there is a demographic churn that seems to be pushing more homes onto the market in Silicon Valley. Longtime residents who have seen the tech hub grow up around them, inflating their cost of living, are looking to cash out while they can still get top dollar. 

"People who live here are leaving in droves," says local Realtors "I'm going on three listing appointments a week -- people in their 50s and 60s -- who are sitting there going, 'Why should I stay here?'" 

Their money can go a lot further in Arizona, Colorado, Oregon, New Mexico -- or just about anywhere.

That doesn't mean Silicon Valley is anywhere near becoming affordable, though.

"Affordability? It just doesn't exist here," she says. "You have to remember a condo in Cupertino is still $1.1 million."

Boomers cashing out

Pat Williams, 68, has lived her whole life in Silicon Valley. Williams raised her daughter as a single parent and for years commuted to San Francisco, where she worked as a commercial glass estimator. She loves the area. 

"I think this area has one of the best climates in the US," says Williams. "Lots of friendly people. And all the amenities, culture, libraries, hospitals. There are pretty green hills most of the year. It is a great place to live."

As home prices and other costs rose around her, though, it became increasingly more difficult to afford gas, food and going out. She felt her quality of life was going downhill. 

But the alternative -- moving farther out to a more affordable area -- was not something she wanted to consider. "If I moved to some nowhere town in California that is more affordable, and I'd have to drive hours back and forth to the Bay Area, I felt it wouldn't be worth it. It wouldn't be living." 

When she retired in March, she made the tough decision that it was time to leave San Jose and California altogether.

So Williams put her three-bedroom, 1,100-square-foot bungalow on the market. She had bought it in 1997 for $245,000. Last month she sold it for $1.1 million.

Williams will leave California and move to Las Cruces, New Mexico, where she says she doesn't know a soul, but finds the lifestyle, culture and amenities appealing and lively.

And her money will go a lot further.

Based on her sale, she's able to build a larger home with almost all the available upgrades for $280,000 in cash and still have money left over for traveling and enjoying her retirement.

She's looking forward to the new adventure, but leaving is bittersweet. "When you live in Silicon Valley, there are expectations that you make a lot of money," she says. "People don't take into account the people with moderate incomes, who paid their bills and lived here their whole lives."

Newcomers keep coming

Even as people are leaving Silicon Valley, newcomers are still arriving thanks to the deep-pocketed tech firms that continue to hire. 

"Buyers are almost 100% people coming in from outside," says Wyss. "They make a lot of money here and that is keeping the prices high. It is shifting down, but down very little. It is a slight correction." 

Wyss says she sees a steady stream of buyers who earn anywhere from $200,000 to $500,000 a year "even without IPO money." "They aren't bothered by a $1.5 million mortgage because they can handle the high payments," she says.

When Sarah Sarra, 26, and her husband Chris, 31, both landed jobs in Silicon Valley -- she as an electrical engineer for NASA, he as a software engineer with Google -- they set about weighing the pros and cons of buying a home.

The prices were shocking to them, even though they were relocating from the relatively expensive Washington, DC, area. 

"We decided if the housing market changes and prices go up, it would it be worth it to buy now, rather than throw away rent for a year or more and then pay more for a house in a year," said Sarah Sarra.

They bought a three-bedroom bungalow in San Jose for $973,000. The house had been on the market for two weeks so they got it for less than the list price of $988,000. 

They were just happy they spent less than $1 million.