Many people are asking “What is the cause of the recent price increases?” My answer , “A combination of factors.”
Here are the 6 major factors:
1- Too many people are looking to buy, since the interest rate is historically low.
2- Many people have already refinanced their homes at very low interest rates and don’t have any urge to move.
3- The rents have skyrocketed. Therefore, many people, who in the past would have sold their homes to upgrade to a larger home, or would have moved to a more upscale neighborhood, have chosen to not sell their homes. Instead they have taken the opportunity to rent their home. They are seeing a positive cash flow, even after taking out equity in their home to buy a second home.
4- During the last 5 years the building of new homes had halted. That didn’t help with the shortage of homes.
5- Reverse mortgages are helping many elderly people to stay in their homes. They are not downsizing their homes.
6- High rents have attracted many foreign investors, who see Silicon Valley as a prime location for secure investment.