SEPTEMBER 2026

There’s a Housing Recession.
Is It Really Happening In Silicon Valley ?

BY DAWN THOMAS • GLOBAL LUXURY REAL ESTATE ADVISOR

7.5 MINS READ • SILICON VALLEY LUXURY REAL ESTATE

I have spent 22 years watching this market move through cycles, and lately there has been a specific kind of headline worth addressing directly. Housing economists have started calling this a housing recession, even while the broader economy keeps adding jobs and growing. I want to be precise about that distinction, because it matters, and because most of what is actually driving the housing-specific headlines does not describe the market you and I are working in together here in Silicon Valley.

What “Housing Recession” Actually Means

A real estate recession has a specific meaning, separate from home prices. It describes a sustained drop in sales volume, fewer construction starts, and softer buyer demand, even while prices stay elevated. That is also why this kind of slowdown looks nothing like 2008. That was a foreclosure crisis. This is frozen activity, fewer transactions rather than a wave of distressed sales, which is part of why prices have held even as volume has not.

Here is the piece that gets lost in translation locally. Silicon Valley and the Peninsula right now are not one market moving in one direction.

BIFURCATED MARKET

Markets Within Markets

There are essentially two, split roughly by price. Above $5 million, activity has picked up. Below that line, in the same cities and sometimes the same neighborhoods, conditions are softer, and how soft depends on exactly where you are standing. That is exactly why a headline is a headline: a single attention-grabbing number, not the full picture underneath it.

Below $5 Million

Conditions are softer, and how soft depends on exactly where you are standing.

Above $5 Million

Activity has picked up, in the same cities and sometimes the same neighborhoods.

Images are illustrations for representation only and do not depict actual listings.

THE NATIONAL NUMBERS

The Slowest Sales Environment In A Generation

Nationally, the numbers are real. Existing home sales fell to their lowest level since 1995 last year, and the early months of 2026 came in softer still. That is not exaggeration. It is the slowest sustained sales environment most agents working today have ever seen, and interest rates in the high 6% range look likely to stay there through the rest of this year.

Rates moving meaningfully lower from here depends on three things lining up:

A resolution to the conflict with Iran

Not yet

Oil prices coming down and staying there

Not yet

Inflation settling rather than just pausing

Not yet

None of the three has happened yet. What is not part of that risk picture right now is employment. The labor market remains healthy, which is one reason the Federal Reserve has not had cause to cut aggressively.

NOT IMMUNE

Santa Clara County

Here is what that national story leaves out. Santa Clara County as a whole has cooled along with it. Countywide, single-family prices were down slightly and sales volume dropped 12% this August compared to a year earlier. I am not going to pretend that number does not exist.

Single-family homes, Los Altos, Palo Alto, and Menlo Park.

Where The Peninsula Diverges

Zoom into Los Altos, Palo Alto, and Menlo Park, and a different market shows up inside Santa Clara and San Mateo counties.

New listings are essentially flat to down across all three cities this year, which tells you sellers are not under pressure to sell.
Nearly 80% of single-family homes in those three cities sold at or above asking price.
Menlo Park sits in San Mateo County, and that county is not cooling the way Santa Clara is. Its single-family median rose 5% year over year in the first quarter.
At the top of that market the gap widens further: sales of homes priced above $5 million, including off-market transactions, rose 27% year over year, with inventory sitting at 1.6 months of supply, about as tight as this market gets.

Same Region, Different Directions

Year-over-year change. Tap or hover a bar for context.

Select a bar to see what it measures.

NEARLY EVERY CITY AT OR ABOVE LIST

City by City

The same split shows up at the city level. Nearly every city in Santa Clara County is currently selling at or above 100% of list price.

Sale price as a share of list price

Sunnyvale
108.3%
Mountain View
107.6%
Palo Alto
107.6%
Los Altos
107.0%
Cupertino
106.9%
Santa Clara
106.0%
Milpitas
104.7%
Campbell
103.7%
San Jose
103.6%
Saratoga
103.3%
Monte Sereno
102.5%
Los Gatos
102.2%
Morgan Hill
100.8%
Gilroy
100.2%
Los Altos Hills
99.0%

Single-family homes, Santa Clara County cities, January to August 2026. Dashed line marks 100% of list price. Source: MLSListings.

Saratoga

Homes are averaging 103% of list, a 33-day market, and a 93% absorption rate, meaning demand is outpacing what is coming onto the market. Price appreciation year over year is essentially flat, a reminder that heavy bidding activity and year-over-year price growth do not always move together.

WHAT’S ACTUALLY DRIVING IT

It Is About Liquidity

I do not think that is a coincidence, and I do not think it is really about interest rates. It is about liquidity. A meaningful share of the buyers I am working with right now are timing purchases around equity events at a small number of AI companies, secondary sales, tender offers, anticipated IPOs. When that kind of wealth becomes liquid, financing stops being the deciding factor, and the transaction looks nothing like what the national headlines are describing.

Equity events

Secondary sales, tender offers, anticipated IPOs

Wealth becomes liquid

At a small number of AI companies

Financing stops deciding the deal

The deal looks nothing like the headlines

The Risk Worth Naming

I want to be straight with you about the other side of that. This is a narrower base of wealth than what drove the last tech-fueled cycle here in the early 2000s, when strength was spread across many more companies. A handful of names are carrying an outsized share of the gains this time. I do not know when or whether that changes, and I am not going to pretend I do. But if you are buying or selling in this specific segment, it is worth understanding that the tailwind behind it is more concentrated than it has been in past cycles, not less.

WHAT THIS MEANS FOR YOU

Which Market Are You Actually In?

None of this means the national conversation is wrong. It means it is describing a different market than the one most of my clients are actually in. If you are trying to figure out which of those two markets applies to your specific situation, whether you are buying, selling, or just trying to make sense of what you are reading, that is worth a real conversation rather than a guess.

Schedule a Call or Coffee →

Data notes: National existing-home sales per the National Association of REALTORS®. Mortgage rates per Freddie Mac Primary Mortgage Market Survey. Local figures: MLSListings, single-family homes; year-over-year comparisons use the same months in 2025 (Santa Clara County: August; San Mateo County: first quarter; city figures: January to August). Each brokerage is independently owned and operated.

Frequently Asked Questions

Is there a housing recession in Silicon Valley?

Nationally, sales are at their lowest since 1995, and Santa Clara County sales fell 12% in August. But Los Altos, Palo Alto, and Menlo Park are still selling at or above asking.

How is the $5 million+ market doing?

Sales above $5 million, including off-market transactions, rose 27% year over year, with only 1.6 months of supply.

Why is the high end so strong?

Liquidity from AI company equity events, like tender offers, secondary sales, and IPOs, rather than interest rates.

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All material presented herein is intended for informational purposes only and is compiled from sources deemed reliable but has not been verified. Changes in price, condition, sale or withdrawal may be made without notice. No statement is made as to accuracy of any description. All measurements and square footage are approximate. If your property is currently listed for sale this is not a solicitation.

SEPTEMBER 2026

There’s a Housing Recession. Is It Really Happening In Silicon Valley ?

What “Housing Recession” Actually Means

BIFURCATED MARKET

Markets Within Markets

Below $5 Million

Above $5 Million

THE NATIONAL NUMBERS

The Slowest Sales Environment In A Generation

NOT IMMUNE

Santa Clara County

Where The Peninsula Diverges

Same Region, Different Directions

NEARLY EVERY CITY AT OR ABOVE LIST

City by City

Sale price as a share of list price

Saratoga

Mountain View

Atherton (San Mateo County)

WHAT’S ACTUALLY DRIVING IT

It Is About Liquidity

Equity events

Wealth becomes liquid

Financing stops deciding the deal

The Risk Worth Naming

WHAT THIS MEANS FOR YOU

Which Market Are You Actually In?

Frequently Asked Questions

Is there a housing recession in Silicon Valley?

How is the $5 million+ market doing?

Why is the high end so strong?

Dawn Thomas Team Newsletter

There’s a Housing Recession.
Is It Really Happening In Silicon Valley ?