Episode 2: Beyond the Headlines in Silicon Valley Real Estate

Welcome to Episode 2 of the Silicon Valley & SF Real Estate podcast! In this episode, Eddie Oberoi sits down with Rishi Bakshi, one of the top brokers in the country with six offices and nearly 600 agents, and Matt Dapolito, VP of Business Development at Intero. The headlines say the market is slowing, but the local numbers tell a very different story. So what's really happening in the Bay Area? Let's dive in.

Meet the Guests

Rishi Bakshi opened his first Intero office in Fremont nearly 21 years ago in a space of a couple thousand square feet with just a few agents. Today he leads six offices and about 600 agents, with 24 years in real estate overall. Because so many agents bring him their questions and challenges every day, he has a rare view of the pulse of the market.

Matt Dapolito, one of my close friends, is VP of Business Development at Intero. Matt and I have done plenty of short videos together, but this format lets us go much deeper.

Real Estate Is Like the Weather

Rishi put it perfectly: real estate is like the weather. The weather in Fremont is completely different from Silver Creek or the Peninsula. Saying "the market is down" is like saying it's 72 degrees and sunny in the United States. You can't even say that about California, or the Bay Area. You have to look at the city, and really, the neighborhood.

Many of the headlines we see, like "the market is down 7% from last month," are national numbers. The Bay Area moves at its own pace, with buyers driven by the tech industry and especially the explosion of AI jobs.

On top of that, we're in an election cycle, and global headlines add to the anxiety. Rishi's advice to his agents applies to everyone: get the information, but don't get caught up in the commentary. Matt described it as the difference between a consumer-driven market, where people fear the sky is falling, and a data-driven one, where the facts often tell a calmer story.

What the Local Data Actually Shows

Here's a sense of scale: Alameda County alone has roughly 850 homes pending. That's 850 buyers and 850 sellers, about 1,700 people in transactions in one county. Santa Clara County is similar. Across the Bay Area, thousands of deals are happening right now.

Rishi shared the numbers his team reviewed across Alameda, Contra Costa, San Mateo and Santa Clara counties:

• Inventory is lower. Active listings are down about 5% to 10% year over year, depending on the county, unlike much of the country.
• Pending sales are steady. Buyers are going into contract at roughly the same rate as last year, despite election worries, higher rates and AI layoff headlines.
• Rates are higher, demand held. At this time last year, the 30-year fixed rate was about 6.43%. Now it's around 7.5%, yet pendings have held steady.

Homes Are Still Selling Above List Price

The list-to-sale price ratio for September was eye-opening:

Northern Alameda County is especially competitive, as buyers priced out of San Francisco head to Berkeley and Oakland. San Mateo County is performing even better, thanks to the strength of the Peninsula market.

So why do we hear so much about price reductions? Usually it's because a seller took the last comparable sale, added a few percent, and overpriced the home. When a home sits for two or three months, it's almost always a pricing problem. When it's priced right, it sells, often above list.

Why Silicon Valley Is Different

California's economy is one of the largest in the world, comparable in size to Japan's or India's. But India has about 1.4 billion people, while California has about 40 million. When you dig into the numbers, it's a completely different ballgame from the rest of the country.

Interestingly, higher price points are performing better than entry-level homes in many of our markets. Buyers at the top have been through market cycles before and understand that a period like this can be a good time to get in.

Neighborhoods That Have Transformed

• San Francisco struggled for years after COVID. Buyers who went in two or three years ago have done very well, and the market is rising again. One Intero agent's small, well-located condo there sold the first weekend.
• East Palo Alto was an area people avoided when I moved here in 1997. Today, nearly everything there is over $1 million, and new communities near Meta include homes in the $3 to $4 million range.
• Union City, Newark and Hayward were once considered "B cities." Schools improved, demand grew, and they no longer carry that label. Castro Valley, the Hayward corridor and San Ramon have been hot in recent years.
• Campbell was once mostly known for its bars. When Matt bought there about eight years ago, people thought he was overpaying at around $2 million. That home is now worth over $3 million.
• Livermore was once the butt of jokes. After communities like Ruby Hill were built, it became a great place to live, with pockets of strong schools.

To be fair, some outlying markets like Tracy and Lathrop are struggling a bit. When the market softens, the outskirts usually feel it first. But the core of Silicon Valley, places like Fremont, Palo Alto and Los Altos, is holding strong. Sunnyvale is hot and Campbell is booming, largely because supply there is so limited while demand stays high.

Where to Buy for Around $2 Million

I asked Rishi, who grew up in the Bay Area, where he'd point a buyer with about $2 million who wants good schools and a great neighborhood. His answer: the East Bay.

• Fremont is a hot spot to buy right now.
• Union City and Newark are up-and-coming with improving schools.
• Castro Valley is desirable and close to BART.
• Dublin, Livermore and Pleasanton offer great communities and quality of life.
• Morgan Hill and Gilroy in the South Bay are also seeing strong demand as buyers recognize the value.

Some East Bay cities currently have a bit more inventory, which gives buyers an opportunity to get into great schools and communities that are central to everything. In the South Bay, $2 million may only get you a townhouse. For a single-family home, the East Bay is a smart choice.

Advice for Nervous Buyers

Matt's advice: if you're ready to buy, go all in. Look at the big picture, not just today. When others pump the brakes, that's often when the biggest opportunities appear.

Marry the home, date the rate. If rates drop, home prices typically rise as more buyers jump back in. Housing isn't like a laptop that only some people want. Everyone needs a place to live, so when affordability improves, demand surges. You can always refinance your rate later, but you can't renegotiate your purchase price. Many buyers today are also choosing adjustable options like 5/7 ARMs at more attractive rates instead of a 30-year fixed.

Think in years, not months. Owning a home is like a long-term investment portfolio. You don't check it every day. If you plan to stay seven to ten years, short-term swings matter much less.

The Power of Leverage

Many people overlook how returns work in real estate. Say you buy a $1 million home with 20% down, or $200,000. If it appreciates $400,000 over seven years, you've made $400,000 on a $200,000 investment. That's a 200% return on your down payment, before costs. That's why people who understand real estate keep buying more.

Advice for Hesitant Sellers

It's easy to feel regret thinking you could have made another $200,000 or $300,000 a year or two ago. But as Matt says, we can't live in "woulda, coulda, shoulda."

• If you sell lower, you usually buy lower too. If you're upgrading, downsizing, relocating or retiring, the net effect is often still a gain.
• Don't try to time the market. Nobody has a crystal ball. It's like wishing you had bought Google, Apple or Tesla years ago. If you have a plan, execute it.
• Look at your total equity. Even if you're slightly below the peak, you may have gained a lot since you bought. My own home in Campbell gained about $1.2 million in equity in seven years, even with a dip around 2017 and 2018 along the way.

Many owners also feel stuck with a 2% or 3% mortgage rate. But if you have a lot of equity, your new mortgage may be smaller than you think, which can make a move very manageable. And this is not 2008. Lending standards today are completely different.

Why Your Agent Matters More Than Ever

In 2021 and 2022, with rates at 2% or 3%, almost anyone with a license could sell a home. Today's market is different. Buyers are pickier, and homes need to be priced well, prepared well and marketed well to sell at or above list price.

A strong agent brings real market data, knows how to present a property, and has a network of vendors for everything from remodeling to title and insurance. They also need to guide sellers with data, because when a seller sets the price based on emotion, the home usually sits.