Silicon Valley Housing Market 2025 Highlights and 2026 Predictions

By Ken DeLeon, Managing Broker & Attorney

The 2025 Silicon Valley housing market was exciting and volatile, shaped by countervailing forces and seasonal patterns that differed from the norm. Traditionally, spring is the busiest and most favorable time for sellers. In 2025, however, the spring market was subdued, marked by lower prices and longer days on market. This slowdown was largely driven by a sharp drop in stock prices following the imposition of steeper-than-expected tariffs.

Thankfully, all’s well that ends well. The housing market rebounded in the summer and gathered significant momentum in the fourth quarter, particularly in the luxury segment. This steady rise in demand mirrored the recovery and continued ascent of Silicon Valley stock prices as the power and global impact of AI became more evident and pervasive.

What made this recovery unique was its bifurcated nature. Rather than rising uniformly, the market experienced a K-shaped recovery, with strong gains at the high end and continued weakness at the lower end, particularly among condominiums. Successful founders and venture capitalists who made prescient AI-related investments were rewarded with rising stock valuations and increased wealth. The strength of the luxury market is reflected in a 34% increase in sales over $10 million from 2024 to 2025 across Santa Clara and San Mateo counties (all data cited is from www.mlslistings.com).

Another indicator of luxury strength is the widening gap between average and median prices, as high-end sales disproportionately lift averages. In Santa Clara County, the median single-family home price rose 4.7%, while the average price increased 4.0%. In San Mateo County, the divergence was more pronounced, with the median price rising just 1.3%, while the average climbed 4.0%.

Conversely, younger employees and buyers with less exposure to AI-driven wealth faced a more challenging environment. Many were unable to make cash offers and instead had to contend with high mortgage rates and heightened job insecurity. Rising HOA dues further weighed on aging condominium complexes, which performed particularly poorly. In San Mateo County, the median condo price declined nearly $80,000, falling from $859,800 to $780,000. Overall, entry-level and move-up buyers remained highly payment sensitive, while the luxury segment benefited from a powerful combination of tech liquidity, cash purchases, and ultra-scarce supply.

2026 Predictions

Silicon Valley’s Importance and Wealth Will Continue to Grow

Having experienced the 1990s dot-com boom firsthand as a young Wilson Sonsini attorney, I have witnessed several cycles of boom and bust in Silicon Valley. However, the speed and pervasiveness with which AI is already transforming the global economy lead me to believe that this wave of wealth creation will dwarf those of the past. Several data points underscore Silicon Valley’s current strength and its continued upside:

The world’s three most valuable companies are headquartered here. Nvidia and Google are each valued at over $4 trillion, with Apple just below that mark.

Collectively, Nvidia and Google added more than $3 trillion in market capitalization in 2025 alone! Google buyers power much of the local luxury market, and Nvidia buyers are increasingly confident stepping into their dream homes.

Five of the world’s ten most valuable companies are based here, including Broadcom (#7) and Meta (#9). Three other top-ten companies – Microsoft, Amazon, and Tesla – each employ thousands of workers in Silicon Valley.

The Luxury Market Will Continue to Build Momentum

Last year marked only the second time my brokerage experienced its strongest sales volume in the fourth quarter, the other being 2020, when pent-up demand surged after the onset of Covid. Personally closing over $130 million in homes priced above $10 million in just the past few months signals continued strength ahead. As private AI firms such as OpenAI expand secondary stock offerings or move closer to eventual IPOs, increased liquidity should further fuel luxury demand. Atherton, Los Altos Hills, Palo Alto, and Woodside are particularly poised for record-setting years, with demand likely to outpace available supply.

AI Buyers Will Change What Luxury Homes Provide

AI has not only increased demand, it has reshaped buyer priorities. The AI founders I work with tend to be younger than prior generations of founders and are far more focused on health, longevity, and lifestyle. Many of my clients are increasingly prioritizing spas, cold plunges, and wellness centers over traditional tasting rooms and expansive wine cellars. Outdoor living spaces that evoke a Four Seasons resort are growing in popularity, along with heightened emphasis on privacy and family security.

Mortgage Rates Will Continue to Decline

Buyers who rely on financing should see further relief as mortgage rates trend downward. Most economists project the 30-year fixed rate will dip below 6% by year’s end. I often recommend 7-year ARMs in a declining rate environment, and with the right lender and optimized relationship pricing, some clients are already securing rates in the low 5% range.

Inventory Will Increase

After years of constrained supply, 2026 may finally bring an increase in available inventory. Many homeowners locked in historically low mortgage rates during the pandemic, often through 7-year ARM loans that begin expiring in 2027. For years, owners hesitated to sell, unwilling to trade sub-3% rates for mortgages that peaked near 7.5%. Morningstar recently reported that, for the first time in several years, more homeowners now carry mortgage rates above 6% than below 3%.¹ As these pandemic-era loans expire, more owners are likely to trade up or down, freeing up additional housing supply.

The Silicon Valley housing market once again navigated a turbulent year marked by geopolitical uncertainty and economic volatility. Yet Silicon Valley continues not only to endure, but to reach new heights as the epicenter of AI innovation and venture capital investment. The bottom line remains unchanged: this is a supply-constrained market where wealth creation, particularly from AI, can overpower high mortgage rates and global uncertainty. Buckle up for what promises to be another dynamic and compelling year for Silicon Valley real estate.

1.https://www.morningstar.com/news/marketwatch/20260108177/for-the-first-time-in-years-more-homeowners-have-a-6-mortgage-rate-than-a-3-one-thats-great-news-for-frustrated-buyers

Ken DeLeon (DRE #01342140) | ken@deleonrealty.com | 650.543.8501

DeLeon Realty, Inc. | DRE #01903224 | Equal Housing Opportunity