REAL ESTATE TOPICS...California Silicon Valley housing market is 'looney-tunes,' real estate broker says

By

Michelle Fox

The housing market in Silicon Valley is "looney-tunes," real estate broker Fred Glick said Friday. 

That's because it's all about supply and demand, with people flooding to the area from around the world.

"We just keep adding people like crazy and we can't get enough supply. That's why people have to share houses. That's why renters know that they have to pay an exorbitant amount of money," the CEO of real estate brokerages Arriva and U S Spaces said in an interview with CNBC's "Closing Bell."

The median home price is $1.1 million in San Francisco and $2.5 million in Palo Alto, according to Zillow.

Erin Lubin | Bloomberg | Getty Images

Things have gotten so pricey that this week alone two high-profile people have been driven out of the Bay Area. San Francisco Federal Credit Union CEO Steven Stapp said he's taken another job in Portland, in large part because his rent in San Francisco is too high.

And a member of Palo Alto's planning commission, Kate Vershov Downing, posted a public letter of resignation on Medium, saying she and her family can't afford the $6,200 rent of a house they share with another family.

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Glick said the real estate market is a local issue, with different cities facing different conditions. In Philadelphia, for example, it is "generically busy," with houses in good areas with good prices being snapped up quickly. In Tuscan, Arizona, however, there is two to three months of inventory for houses under $300,000, he said. And Houston has an overbuilt luxury problem, he said.

"It depends on where you go," said Glick.

One thing that won't impact the market will be if mortgage rates rise, he said.

"Mortgage rates don't matter because the way it is, you are thrilled to be a mortgage," he said, noting that it is a nightmare getting mortgages approved.

"If the rates go up, people take a five-year ARM instead of a 30-year fixed," he said.