Hidden Truth: What’s Causing Home Prices in Santa Clara to Rise
Timothy Alston | Broker
Aegis Luxury Real Estate · DRE# 01328224
Published
July 25, 2022
Sports, tech, and community
Home prices in Santa Clara are not rising randomly. Two structural forces, housing supply and buyer demand, are driving ongoing home price appreciation in markets across California. Even as price growth moderates from its pandemic peak, the imbalance between how many homes are available and how many people want them continues to push values upward.
You know how it feels like the housing market should be cooling down by now? And yet prices in Silicon Valley just keep holding firm or climbing? A lot of people in Santa Clara are wrestling with exactly that right now. They expected relief. What they got instead was a market that still leans toward sellers, even as mortgage rates climbed. But here is the part most people have not stopped to think about yet: the forces keeping prices elevated are not short-term noise. They are structural, and they have been building for over a decade.
What’s Causing Ongoing Home Price Appreciation to Persist?
Have you ever stopped to think about what actually drives home values over time? It is not headlines. It is not Federal Reserve announcements. At its core, price is always about one thing: how many people want something versus how much of it exists.
Right now, in the Santa Clara market, both sides of that equation point in the same direction. Supply is still historically low. Demand is still structurally high. And that combination creates ongoing home price appreciation regardless of what interest rates do in any given month.
What would it mean for you if prices continued to rise for the next three to five years, and you were still on the sidelines waiting for a better entry point?
The Supply Side: A Decade of Underbuilding Has Consequences
Before the 2008 housing crisis, builders were putting up homes at an aggressive pace. Lending standards were loose, buyer demand was inflated, and construction surged to match it. Then the crash hit. Builders pulled back hard. Many left the industry entirely. And for the next fourteen years, the country built far fewer homes than it needed.
That gap does not close quickly. Construction timelines are measured in years, not months. Even with more new homes coming to market now, the cumulative deficit from fourteen years of underbuilding creates a supply floor that is unlikely to shift dramatically in the near term.
How long have you been watching inventory levels and waiting for them to meaningfully change? Does that gap between what you hoped for and what you have seen start to make more sense now?
In the Santa Clara real estate market specifically, where available land is constrained and zoning challenges add friction, the supply problem is compounded. The result: homes in Santa Clara that are priced correctly continue to attract serious buyer attention even in a higher-rate environment.
The Demand Side: Millennials Are Just Getting Started
Buyer demand moderated when mortgage rates rose. That part is true. But there is a deeper current running underneath the surface that most buyers and sellers are not fully accounting for.
Odeta Kushi, Deputy Chief Economist at First American, has noted that millennials are transitioning into their prime homebuying years and will remain a central force driving homeownership demand in the years ahead. That is not a short-term trend. It is a generational wave.
Think about it this way: the largest generation in American history is now in its thirties. Many of them delayed buying during the pandemic chaos. Some are still renting, watching their rent climb each year. As they move into peak household-formation years, that pent-up demand does not disappear. It waits. And then it enters the market.
According to Bankrate, supplies of homes for sale remain near record lows, and while rising mortgage rates have dampened some demand, demand still outpaces supply due to limited new construction and strong household formation among millennials.
Can you see how that combination, a generation ready to buy and a market without enough homes to sell, continues to create upward pressure on prices?
What’s Causing the Gap Between Expectation and Reality?
A lot of buyers expected prices to drop when rates went up. That logic makes sense on the surface. Higher borrowing costs should cool demand, right? And they did, somewhat. But they did not cool supply. Existing homeowners who locked in low rates years ago stopped listing. That pulled even more inventory off the market at the exact moment buyers expected more options.
What is that actually costing someone who has been waiting for a price correction that structural forces may not allow to happen?
This is the causing ongoing tension in the market right now: two forces that should balance each other out, rate pressure on demand and seller reluctance to list, are instead reinforcing the same outcome. Prices hold. In some areas, prices rise.
If you are thinking about buying a home, browse Santa Clara homes for sale to get a real-time picture of what inventory actually looks like right now. The numbers tell a story that waiting often makes harder to act on, not easier.
Where Does This Leave You?
Based on what buyers and sellers are sharing, the concern is not usually about prices themselves. It is about timing. Nobody wants to buy at the top. But what if there is no top in the traditional sense? What if the market simply reprices to a new normal, and waiting means buying at a higher price point with no corresponding drop in between?
Experts project that home price appreciation will continue at a more moderate pace, not at the frenzied rate of 2021 and 2022, but upward. Moderation is not the same as reversal. That distinction matters enormously if you are making a financial decision based on what you expect prices to do.
What happens if nothing changes for you in the next three years? If you stay in a rental, watch rent climb, and watch home equity in the Santa Clara market accumulate for someone else, where does that leave you financially?
If that question landed somewhere real for you, the next step is not a commitment. It is just a conversation. A straightforward look at where you are, what you can qualify for, and what the numbers actually show for your specific situation.
Timothy Alston, licensed Broker (DRE# 01328224) at Aegis Luxury Real Estate in Cupertino, works with buyers and sellers across Santa Clara County. Reach out directly at (408) 207-4593 when you are ready to take that honest look.
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Broker · DRE# 01328224
Aegis Luxury Real Estate
Harvard Business School Online, Certified Master Negotiation
23+ Years Silicon Valley Real Estate Experience
Retired Military Veteran
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The data relating to real estate for sale on this display comes in part from the Internet Data Exchange program of the MLSListings™ MLS system. Real estate listings held by brokerage firms other than Aegis Luxury Real Estate are marked with the Internet Data Exchange icon and detailed information about them includes the names of the listing brokers and listing agents.
Based on information from the MLSListings MLS as of July 11, 2026. All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information.
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Aegis Luxury Real Estate · Timothy Alston, Broker, DRE# 01328224 · 10080 N. Wolfe Rd Ste SW3-200, Cupertino CA 95014 · (408) 207-4593
Last updated: July 11, 2026 | Data reflects July 2026 MLS statistics
