All about Life & Real Estate in Silicon Valley – Broker Michael Koo's Blog.

In Mid-Summer, US pending home sales fell ↓2.3% MoM and ↓2.2% yearly, showing softer contract activity as buyers navigated a tougher affordability backdrop.
MoM contract signings declined across all four major US regions in Mid-Summer. Yearly activity improved only in the Midwest and softened elsewhere.
The West saw the sharpest Mid-Summer pullback, with pending sales ↓4.7% MoM and ↓7.1% yearly, while the Midwest posted the only yearly gain.
An economist said the year's highest mortgage rates hit in Mid-Summer, while record-high prices kept listings active longer and cooled above-ask offers.
That economist said job gains could bring more buyers back if mortgage rates stabilize or ease, with improving supply and affordability supporting future demand.

The national confidence index in Mid-Q3 edged up to 35, still below the 50 mark that signals generally positive conditions for single-family builders.
Current sales improved to 39, six-month sales expectations held at 43, and prospective buyer traffic stayed limited at 23, showing demand remained uneven.
Pricing activity eased slightly: ~35% of builders cut prices in Mid-Q3 versus ~37% in Early-Q3, while the avg. reduction held near 6%.
Price cuts remained widespread, with ~63% of builders still offering incentives and >30% reporting reductions for 16 straight months, underscoring ongoing cost-demand balancing.
Conditions looked comparatively stronger in smaller, less-dense markets, among smaller builders, and in custom construction, suggesting performance continued to vary meaningfully across US segments.

Hybrid work has reshaped US offices, pushing investors to consider conversions, specialized spaces, flexible models, and hands-on repositioning instead of passive, traditional leasing.
Office-to-residential reuse is a leading path where transit and amenities already exist, though deep floor plates, plumbing, HVAC, and design hurdles require due diligence.
The strongest demand is concentrating in premium and niche properties, including medical offices, labs, and amenity-rich workplaces, while flexible space models offer shorter-term agility.
Distressed sales may expand as lenders grow cautious, so investors need strong business plans, alternative capital sources, and clear strategies to stabilize or repurpose assets.
Winning approaches depend on hyper-local insight, sustainability upgrades, smart-building tools, and public incentives, with experts expecting a multi-yr rebalancing rather than a quick reset.

Early-Q3 applications for newly built US homes fell ↓~6% yearly and ↓1% MoM, showing weaker buyer financing demand than both a year earlier and Late-Q2.
An industry group linked the slowdown to elevated new-home inventory and greater buyer sensitivity to higher mortgage costs as challenging sales conditions persisted.
Its estimate showed new single-family sales ↓3% from Late-Q2 to a 647K annual pace, equal to 54K homes sold versus 56K previously.
Builders kept leaning on incentives averaging 9% to 14% of typical prices, while the avg. loan amount eased to $374K in Early-Q3.
Official Late-Q2 data had shown sales ↑1.6%, yet current-year activity remained ↓~5%, underscoring how Early-Q3 demand softened as financing costs moved higher into Mid-Q3.

An industry group's analysis projected that by 2035, the US could have more homes listed for sale than people looking to buy or rent.
Slower population growth, lower birth rates, aging demographics, and reduced immigration are expected to shrink household formation across the US over the next decade.
Pandemic-era low mortgage rates temporarily intensified the shortage, but demand later cooled while post-pandemic construction stayed elevated, creating conditions for a future supply-demand mismatch.
If builders keep adding homes at the current pace, some local markets could see softer prices, more buyer choice, and slower equity gains.
The expected release of homes from aging owners was described as gradual, not sudden, meaning supply may build over many years rather than surge.

Buyers are gaining negotiating power as more markets shift away from seller-dominated conditions and competition becomes less intense.
Builders are increasingly using incentives, mortgage-rate buydowns, and price adjustments to attract hesitant buyers.
More available homes are giving purchasers greater flexibility to compare properties rather than rushing into offers.
Elevated mortgage rates remain a major constraint, keeping demand cautious even as purchasing opportunities improve.

Mortgage rates are now expected to remain elevated into 2027, meaning financing costs could continue influencing buyer decisions.
A slower decline in rates could keep demand below historical norms even if economic conditions improve.
Buyers may increasingly focus on rate buydowns, adjustable products, and other financing strategies to manage borrowing costs.
Home-price growth could remain moderate as high financing costs limit how aggressively buyers can bid.

Bay Area fundamentals stayed solid, with the AI/ML sector continuing to hire and lease large blocks of space despite regional tech layoffs.
Job growth is expected to keep rising over the next 12 mo, giving multifamily demand added support as the Bay Area economy keeps moving forward.
Development remains constrained by steep construction costs, even with improved market conditions, so the region still needs more apartment supply to meet demand.
State housing mandates and less onerous regulations may help more Bay Area deals pencil out, creating a clearer path for future multifamily construction.
Expectations also point to second-half IPOs from two leading AI/ML firms, a potential tailwind for hiring, leasing activity, and broader apartment demand.