The Real Reason Silicon Valley's Housing Market Refuses to Cool Down in 2026

Why tech workers at NVIDIA, Apple, Google, Meta, and Databricks are still paying $3M+ for homes in Palo Alto, Los Altos, and Menlo Park—and what this means for the future of the Peninsula real estate market.

The conventional wisdom about Silicon Valley's housing market goes something like this: interest rates are up, tech layoffs have happened, and prices should be cooling. Except they're not. In fact, median home prices in Santa Clara County just crossed $2 million for the first time in history, and homes in Palo Alto and Los Altos are routinely selling for 10-15% over asking with multiple offers in less than two weeks.

As someone who's been selling homes on the Peninsula since 2018, I've watched this market evolve through multiple cycles. But what's happening right now is different. The buyers I'm working with today have fundamentally different financial profiles than the buyers from even three years ago, and it's reshaping the entire competitive landscape of Peninsula real estate.

The NVIDIA Effect: How One Company's Stock Performance Changed Everything

Let's talk about what's actually driving this market, because it's not what most people think. Yes, Silicon Valley has always been expensive. Yes, there's limited inventory. But the single biggest factor I'm seeing in 2026 is the unprecedented wealth creation happening at a handful of companies—and NVIDIA sits at the epicenter.

NVIDIA's stock performance over the past two years has created a new class of buyers who are showing up to the market with $500,000 to $1 million in cash for down payments. These aren't crypto windfalls or inheritance money. They're RSU packages that have appreciated so dramatically that engineers and mid-level managers in their early 30s are suddenly competing for the same $3-4 million homes that previously only went to C-suite executives.

I recently worked with a client—a senior engineer at NVIDIA—who bought a home in Los Altos for $3.2 million. His down payment was $900,000, entirely funded by stock sales from RSUs that vested over the previous 18 months. Three years ago, this would have been unusual. Today, it's becoming standard operating procedure for NVIDIA employees, and it's fundamentally changed what "normal" looks like in terms of buyer qualifications.

The ripple effect extends beyond NVIDIA. Apple has been on a tear, Google continues to print money, Meta has rebounded from its 2022 doldrums, and Databricks is creating a new generation of millionaires as it approaches what many expect to be a blockbuster IPO. When you combine the wealth from these five companies alone—all of which have major offices within a 20-mile radius of Palo Alto—you get a buyer pool with purchasing power that dwarfs what we saw even during the 2020-2021 pandemic boom.

Why Location Still Trumps Everything Else

The Peninsula's geographic advantage hasn't changed, but its value proposition has intensified. Palo Alto, Los Altos, and Menlo Park sit at the gravitational center of the tech industry's three-way pull: San Francisco to the north (where AI startups like Anthropic and OpenAI are minting new fortunes), the established Silicon Valley giants to the south and east, and Stanford University providing the intellectual foundation for it all.

For a tech employee, living in this corridor isn't just about convenience—it's about career optionality. If you're at Google in Mountain View and get recruited by Apple in Cupertino, you don't need to move. If you're at Meta in Menlo Park and decide to join a hot AI startup in San Francisco, you're looking at a manageable Caltrain commute rather than a relocation. This geographic flexibility has real economic value, and buyers are willing to pay a premium for it.

The commute calculus matters more than most people realize. I've seen buyers pay $200,000 to $300,000 more for a home that cuts their daily commute from 45 minutes to 20 minutes. When you're making $400,000 to $600,000 in total compensation and your time is genuinely valuable, that math works. Every 10 minutes saved on a commute translates to roughly $100,000 in home value, and buyers—especially those in highly compensated roles at NVIDIA, Apple, and Google—understand this intuitively.

Tesla's headquarters in Palo Alto, Google's sprawling campus in Mountain View, Apple's spaceship in Cupertino, Meta's Frank Gehry-designed headquarters in Menlo Park, and NVIDIA's Santa Clara campus all sit within a 25-minute drive of most Peninsula neighborhoods. This concentration of high-paying employers in such close proximity creates a kind of gravitational field that keeps pulling prices upward, regardless of broader economic conditions.

The School District Premium: Why Parents Pay Seven Figures for Zip Codes

If tech job proximity is the first reason people pay Peninsula premiums, school quality is a close second—and for families with children, it often becomes the primary driver. Palo Alto Unified and Los Altos School Districts consistently rank in the top 1% of California schools, and the market reflects this with brutal efficiency.

I've had clients tell me they're willing to live in a smaller house, forgo luxury finishes, or buy something that needs work—as long as it's in the right school district. The premium for access to Palo Alto schools versus a comparable home in a lower-ranked district can easily hit $500,000 to $1 million. Parents understand they're not just buying a house; they're buying 13 years of elite public education that would cost $300,000+ per child at private schools.

The tech industry's focus on STEM education has made Peninsula school districts even more attractive. Palo Alto schools offer advanced computer science, robotics programs, and direct pathways to Stanford summer programs. For parents who work in tech and want their children to have every educational advantage, these schools represent a logical extension of their own career paths. The result is a bidding war among the exact demographic that has the most money to spend: dual-income tech couples where both partners are senior engineers or product managers pulling in combined compensation packages north of $800,000.

The data backs this up. According to recent sales figures, homes in Palo Alto's most desirable school attendance areas are selling for median prices of $3.4 million, while comparable square footage in neighboring cities with lower-ranked schools trades at $2.2-2.5 million. That $900,000 to $1.2 million delta is entirely attributable to school quality, and buyers are paying it without hesitation.

The Inventory Crisis That Won't Quit

Here's the thing about Silicon Valley real estate that continues to confound market predictions: we can't build our way out of this. Santa Clara County currently has 1.2 months of housing inventory—the lowest of any major county in California. A balanced market typically requires 4-6 months of inventory. We're not even close, and there's no meaningful relief on the horizon.

The reasons are multifaceted and deeply structural. Geographic constraints limit where you can build—the Santa Cruz Mountains to the west, the Bay to the east, and strict zoning regulations everywhere in between. Cities like Palo Alto and Los Altos have made conscious decisions to preserve their low-density character, which means single-family homes on 8,000-10,000 square foot lots aren't getting replaced by multi-unit developments. Prop 13 creates a powerful disincentive for long-term homeowners to sell, since they'd lose their grandfathered property tax rates.

The result is a market where supply has been declining for over a decade while demand has only increased. In 2023, San Mateo County recorded its fewest home sales in 25 years. 2024 was the second-fewest. We're on track for similar numbers in 2026. Meanwhile, venture capital funding in the Bay Area hit $80 billion last year, tech employment continues to grow (despite high-profile layoffs that affect a relatively small percentage of the overall workforce), and the AI boom is creating new wealth faster than old wealth is exiting the market.

For sellers, this dynamic creates extraordinary leverage. Well-prepared homes in desirable locations are routinely receiving 4-8 offers, selling in under two weeks, and going for 5-12% over asking price. I recently listed a home in Los Altos for $2.85 million. It received 11 offers and sold for $3.15 million—a full $300,000 over asking. This isn't an outlier; it's become the expected outcome for properties that are properly priced and presented.

The Downsizing Wave: Why Baby Boomers Hold the Key

If there's one predictable source of inventory over the next decade, it's downsizing. The largest cohort of Peninsula homeowners are Baby Boomers sitting on properties they bought in the 1990s or early 2000s. Their children have moved out, they're in homes that are too large for their current needs, and they're sitting on $2-3 million in unrealized gains.

The challenge—and opportunity—is that Prop 13 and capital gains tax considerations create complicated decisions around selling. If you bought a home in Menlo Park in 1998 for $600,000 and it's now worth $3.2 million, you're looking at a $2.6 million gain. After the $500,000 married-couple exclusion, you're paying taxes on $2.1 million at combined federal and California rates of roughly 28-33%, which works out to $588,000 to $693,000 in taxes.

That's a significant hit, and it's why many owners delay selling even when they want to downsize. Prop 60 and Prop 90 help by allowing homeowners over 55 to transfer their property tax basis to a new home, but they don't solve the capital gains issue. I spend a lot of time working with clients and their CPAs to structure sales that minimize tax impact through timing, 1031 exchanges, or strategic planning around other life events.

Despite these headwinds, downsizing remains the number one reason people sell homes priced above $2 million on the Peninsula. Empty nesters want smaller homes, less maintenance, and the ability to travel without worrying about a 4,000 square foot house. For buyers, these sellers often prioritize clean transactions and certainty over extracting the last dollar, which can create opportunities to negotiate favorable terms even in a competitive market.

The Remote Work Paradox

One of the more interesting dynamics in the current market is how remote work has affected Peninsula real estate in ways that run counter to initial predictions. When COVID hit and tech companies went remote, the conventional wisdom was that people would flee expensive cities like Palo Alto for cheaper locations now that they could work from anywhere.

What actually happened is more nuanced. Yes, some people left—there was net out-migration from both San Mateo and Santa Clara counties during 2020-2022. But the people who left tended to be middle-income families priced out of the market, not high-earning tech workers. The tech workers who stayed or moved to the Peninsula during this period were those with the financial resources to afford larger homes with dedicated office space, and they've been doubling down on the area precisely because they can work remotely.

The logic goes like this: if you only need to be in the office 2-3 days a week, the value of living in a great school district, having access to top restaurants and culture, and being within reasonable proximity to multiple tech campuses (in case you switch companies) actually increases. You're not commuting every day, so the higher housing costs relative to somewhere like Austin or Miami become more tolerable. And if you're making $500,000+ between salary and RSUs, the difference between a $3 million home in Palo Alto and a $1.2 million home in Austin is meaningful but not prohibitive.

The result has been a bifurcation: middle-income workers left for cheaper markets, while high-income tech workers either stayed or increased their real estate footprint by buying larger Peninsula homes with offices, gyms, and outdoor space. This has pushed median prices up even as some absolute number of residents may have declined, because the remaining and new buyers have dramatically higher purchasing power.

What International Buyers Need to Know

Silicon Valley has always attracted global talent and global capital, and that hasn't changed. Foreign nationals—particularly from countries with strong tech sectors and high household savings rates—continue to see Peninsula real estate as a stable store of value and a pathway to U.S. residency for their families.

The mechanics of buying as a foreign national are more complex than for U.S. citizens but entirely manageable. You're typically looking at 30-40% down payments versus 20% for domestic buyers, and you'll need an ITIN (Individual Taxpayer Identification Number) rather than a Social Security number. Financing is available through lenders who specialize in foreign national mortgages, though rates may be slightly higher.

I work extensively with international buyers, and one of the most important services I provide is language support. I'm fluent in Mandarin, Cantonese, and Japanese, which allows me to explain the intricacies of California real estate law, property taxes, HOA structures, and contract terms in my clients' native languages. Real estate contracts in California are notoriously complex, with disclosures that can run to hundreds of pages. Having an agent who can walk you through these documents in your preferred language isn't just convenient—it's essential for making informed decisions.

International buyers also benefit from understanding the property tax system, which is unique to California. Prop 13 caps property tax at roughly 1.2% of the purchase price and limits increases to 2% per year. This creates long-term predictability in your carrying costs that's unusual compared to other states or countries. On a $3 million home, you're looking at about $36,000 per year in property taxes, and that number only grows modestly over time regardless of market value appreciation.

How Tech Employees Can Leverage RSUs for Real Estate

One of my areas of specialization is helping tech employees navigate the intersection of equity compensation and real estate purchases. If you work at NVIDIA, Apple, Google, Meta, or Databricks, a significant portion of your compensation likely comes in the form of RSUs (Restricted Stock Units). Understanding how to time RSU vesting, manage tax withholding, and coordinate stock sales with home purchases can make the difference between a successful offer and losing out in a competitive situation.

The typical tech compensation package for a senior engineer or mid-level manager at a major company might look like this: $200,000 base salary, $50,000 annual bonus, and $250,000 in annual RSU value (at current stock prices). That $500,000 total compensation sounds great, but the RSUs vest over time—usually quarterly or annually—and are subject to immediate tax withholding of 37-40% for federal taxes plus California's 13.3% top rate.

What this means in practice: if you have $250,000 in RSUs vesting in a given year, you'll see roughly $125,000 in after-tax cash (less if your total income pushes you into higher brackets or triggers AMT). Over three years, that's potentially $375,000 you can use for a down payment, assuming you don't spend it on other things and the stock price holds or appreciates.

For NVIDIA employees, the math has been extraordinary. If you received an RSU grant in 2022 worth $200,000 at the time, and NVIDIA's stock has gone up 3-4x since then, those same RSUs are now worth $600,000-$800,000. After taxes, that's $300,000-$400,000 in down payment capability from a single grant that's now fully vested. I've seen this pattern repeat across multiple NVIDIA clients, and it's why so many are suddenly able to compete for homes that would have been out of reach just a few years ago.

The key is working with a lender who understands tech compensation. Not all mortgage providers know how to properly underwrite RSU income, especially unvested RSUs that will contribute to your future ability to make payments. Finding a lender who specializes in tech employees and can credibly present your full compensation picture to sellers is critical in multiple-offer situations where sellers are evaluating not just price but likelihood of closing.

Market Predictions for 2026 and Beyond

Predicting real estate markets is a fool's errand, but I can tell you what I'm seeing on the ground and what seems likely based on current trajectories. Barring a major tech recession or unexpected economic shock, I expect Peninsula home prices to appreciate another 5-8% in 2026. This is more modest than the 12-15% gains we saw in 2024-2025, but it's still well above inflation and national averages.

The factors supporting continued appreciation are robust: limited inventory that's not getting meaningfully better, ongoing job creation in AI and tech sectors, massive wealth creation at companies like NVIDIA and Databricks, and sustained demand from international buyers. Interest rates have stabilized in the 6-7% range for jumbos, and while that's higher than the 3-4% range we saw during COVID, wealthy buyers are less sensitive to rate changes because they're putting down larger percentages in cash.

The wild card is whether we see a true tech recession. If NVIDIA's stock price collapsed, if AI funding dried up, if multiple major companies simultaneously did significant layoffs—that could change the dynamic. But I'm not seeing signals that point in that direction. The tech industry has proven remarkably resilient, and even during periods of high-profile layoffs, the overall employment picture has remained strong.

What I do expect is continued stratification in the market. The gap between "good enough" properties and truly exceptional properties in the best locations will continue to widen. A well-maintained 3,000 square foot home in prime Palo Alto or Los Altos with top schools will command ever-higher premiums, while dated homes in less desirable pockets may see more modest gains or even stagnation.

The Competitive Dynamics of Multiple Offers

If you're buying on the Peninsula in 2026, you need to be prepared for competition. The days of submitting an offer at asking price and having time to think about it are long gone. In today's market, well-priced homes in desirable locations receive their first offer within 48 hours, accumulate 4-8 total offers by the end of the first week, and close within 2-3 weeks at prices 5-15% above asking.

The mechanics of competing in this environment require both financial preparation and strategic sophistication. You need a pre-approval letter from a lender that sellers will take seriously, proof of funds showing you have the cash for your down payment, and a willingness to be flexible on terms like rent-backs if the seller needs time to move out.

Escalation clauses have become standard—these are provisions that automatically increase your offer by a specified increment above any competing offer up to a maximum ceiling. I've seen escalation clauses range from $25,000 increments capped at $200,000 over list, to $50,000 increments with no cap at all. The risk with escalation clauses is that they can sometimes signal weakness if you set your maximum too low, so understanding the market value and having conviction about your ceiling is critical.

Waiving contingencies is another common tactic, though it comes with real risks. The inspection contingency protects you from discovering major problems after you're in contract. The appraisal contingency protects you if the home doesn't appraise for the offer price (forcing you to either renegotiate or make up the difference in cash). The financing contingency protects you if your loan falls through. Waiving any of these should only be done with careful consideration and ideally after conducting pre-inspections or having very high confidence in your financing.

The reality is that in truly competitive situations for the most desirable properties, buyers who aren't willing to waive at least some contingencies often don't win. But there are smart ways to do this that manage risk: conducting inspections before making your offer, having your lender do extensive pre-underwriting to minimize financing risk, and ensuring you have enough cash reserves to cover an appraisal gap.

Why Seller Strategy Matters More Than Ever

If you're selling on the Peninsula, the strategy of how you price, market, and negotiate your home has never been more important. The temptation for many sellers is to price aggressively high, figuring that in a hot market they can always come down if needed. This is usually a mistake.

The optimal strategy in a competitive market is to price 5-10% below true market value to attract maximum attention and create a bidding war. When done correctly, this approach routinely results in final sale prices 10-20% above the list price, netting more than if you'd priced aggressively from the start. The key is understanding true market value (which requires an agent with deep local knowledge and recent comp data) and having the conviction to trust the strategy even when it feels counterintuitive.

Preparation matters enormously. Professional staging for a $3 million home costs $5,000-$8,000 and reliably generates $30,000-$75,000 in additional sale price. Professional photography and drone footage are table stakes—buyers are scrolling through dozens of listings online, and if your photos don't immediately grab attention, they'll never schedule a showing. Homes that are move-in ready command significant premiums over homes that need work, even if the work is relatively minor.

Timing is another consideration. The Peninsula market has clear seasonal patterns. Spring (March-June) is the strongest period because families want to close before the school year starts. Fall (September-November) sees a secondary spike after summer vacations end. December and January are generally slow, and trying to sell during those months typically results in lower prices and longer days on market. If you have flexibility in your timing, listing in late April or early May tends to produce the best results.

Common Mistakes Buyers Make

In my years working with tech employees and other high-earning professionals, I've seen patterns of mistakes that cost buyers time, money, or both. Understanding these pitfalls can help you avoid them.

The most common mistake is underestimating total costs. You might budget for a $3 million purchase and assume you need $600,000 for a 20% down payment. But you also need to account for closing costs (2-3% of purchase price), property taxes prorated from the closing date, potential HOA transfer fees, inspection costs, and the inevitable unexpected repairs or upgrades you'll want to make after moving in. All-in, a $3 million purchase typically requires $700,000-$800,000 in liquid cash.

Another frequent error is falling in love with a house before running the numbers on your commute, school districts, and ongoing costs. A beautiful home in Los Altos Hills might seem perfect until you realize it's 35 minutes from your office in Mountain View instead of the 20 minutes you assumed, or that it's in a different school district than you expected, or that it has $15,000 per year in HOA fees you didn't account for. Do your diligence upfront before becoming emotionally invested.

Tech employees specifically often make the mistake of not properly planning their RSU sales timing. If you need $600,000 for a down payment and you have RSUs vesting, you need to account for the 50% tax hit and the fact that selling large blocks of stock can take time if you're subject to trading windows or blackout periods. Starting this planning 6-9 months before you want to buy gives you maximum flexibility and helps avoid situations where you find your dream home but can't access the cash in time.

Finally, many buyers underestimate the importance of relationships and local knowledge. Silicon Valley's real estate market is surprisingly tight-knit, with the same agents and players interacting repeatedly. Having an agent who has existing relationships with other listing agents, who knows how to position offers to be taken seriously, and who understands the subtle signals that indicate whether a property will generate multiple offers or not—these things matter more than buyers realize.

The Future of Peninsula Real Estate

Looking ahead, I see several trends that will shape the Peninsula market over the next 5-10 years. The first is continued appreciation driven by the fundamentals I've outlined: limited supply, concentrated wealth creation, geographic advantages, and world-class schools. Absent a major economic shock, these factors aren't going away.

The second is increasing stratification between the ultra-luxury market ($5 million+) and the merely expensive market ($2-3 million). The ultra-luxury segment is likely to see even stronger appreciation as global wealth continues to concentrate and international buyers seek stable assets in politically secure jurisdictions. The $2-3 million segment will remain competitive but may see more modest gains as higher interest rates affect affordability at these price points.

The third trend is generational turnover. As Baby Boomers age and downsize, we'll see the largest intergenerational wealth transfer in history. Some of this wealth will flow into Peninsula real estate as inheritance gives younger buyers down payment capability they wouldn't otherwise have. At the same time, millennial and Gen Z tech workers are reaching their peak earning years and starting families, which will sustain demand.

The AI boom is likely to be a significant factor. If AI continues to deliver on its promise (or even a fraction of its promise), the companies at the forefront—many of which are concentrated in the Bay Area—will generate enormous wealth. This could create yet another wave of newly minted millionaires looking to convert equity into real estate, further tightening the market.

Climate change is a wildcard that's starting to influence buyer decisions more explicitly. The Peninsula's Mediterranean climate, relatively low wildfire risk compared to other parts of California, and lack of extreme weather events make it attractive from a climate resilience perspective. As other parts of the country face increasing climate volatility, I expect some of that to translate into sustained demand for the Bay Area despite its high costs.

Working with the Right Real Estate Agent

I've been doing this long enough to know that the agent you choose makes a material difference in outcomes. In a market where homes sell for 10% over asking with 8 competing offers, the agent who can help you craft the winning bid or negotiate the best terms for your sale is providing real economic value.

What should you look for in a Peninsula real estate agent? Deep local knowledge is non-negotiable. Markets in Palo Alto, Los Altos, and Menlo Park all have their own micro-dynamics, and an agent needs to know which neighborhoods command premiums, what recent comps matter, and how to price properties to attract maximum competition (for sellers) or identify opportunities (for buyers).

For tech employees, you want an agent who understands equity compensation and can work with lenders who specialize in tech workers. This isn't just about getting approved for a loan—it's about presenting your offer in a way that sellers and their agents understand and trust. When a seller sees two offers at the same price but one buyer has a straightforward W-2 income and the other has complex RSU structures, they'll often favor the simpler financial profile unless the agent can effectively communicate that the RSU-heavy buyer is just as qualified or more so.

For international buyers, language capabilities matter. But beyond language, it's about understanding the cultural context and specific concerns that international buyers bring. Questions about property rights for non-citizens, tax implications, school enrollment for foreign nationals, and long-term residency strategies all require specific expertise.

Responsiveness and availability are crucial in a fast-moving market. When a new listing hits the MLS and you need to see it within 24 hours to have a chance at making an offer, you need an agent who can accommodate that schedule. When you're negotiating against 7 other offers and the listing agent wants responses within 4 hours, you need someone who's available and can help you make quick, informed decisions.

Finally, look for an agent with a track record of success in multiple-offer situations. Winning offer strategies aren't one-size-fits-all—they depend on reading the seller's motivations, understanding what terms beyond price might matter (timing, contingencies, flexibility), and crafting offers that stand out. Ask prospective agents about their win rate in competitive situations and what percentage of their listings sell above asking price.

Taking the Next Step

Whether you're a tech employee looking to buy your first home on the Peninsula, an executive upgrading to a larger property, an international buyer seeking Silicon Valley real estate, or a homeowner considering selling, the current market presents both opportunities and challenges.

For buyers, the key is preparation: get pre-approved by a tech-savvy lender, understand your true budget including all costs, clarify your non-negotiables on location and schools, and be ready to move quickly when the right property appears. Having an agent who can help you navigate competitive situations and craft winning offers is essential.

For sellers, the opportunity lies in capitalizing on strong demand through strategic pricing and presentation. Well-prepared homes in desirable locations are commanding premium prices, but success requires careful planning around timing, pricing strategy, and market positioning.

The Peninsula real estate market isn't for everyone. It's expensive, competitive, and unforgiving of mistakes. But for those who can compete in this environment—whether through tech industry earnings, accumulated wealth, or strategic planning—the rewards of living in one of the world's most dynamic economic regions, with world-class schools, incredible career opportunities, and a quality of life that's hard to match, make the investment worthwhile.

Lisa M. Lum is a Silicon Valley real estate agent specializing in Palo Alto, Los Altos, Menlo Park, and the broader Peninsula. She works extensively with tech employees from NVIDIA and Google, as well as international buyers. She provides comprehensive real estate services tailored to the unique needs of Silicon Valley's diverse professional community.

Contact:
Phone: (650) 668-1868
Email: lisa.lum@cbrealty.com
Website: www.CloseWithLisa.com

Office:
Coldwell Banker Realty
1706 El Camino Real, Suite 220
Menlo Park, CA 94027

License: California DRE #02005150

This article reflects market conditions as of Spring 2026. Real estate markets change rapidly. Contact Lisa for current market analysis and personalized guidance.