Mixed Signals in the San Mateo County Real Estate Market

Autumn markets in counties around the Bay Area have seen significant shifts, with wide variance in the magnitude of these changes between counties. So far, San Mateo itself has seen less dramatic changes than other local markets such as Santa Clara and Sonoma Counties.

September saw a surge in new listings – providing buyers with more choices and lessening the competition for homes – but then October fell back to a relatively normal level.

October saw an elevated level of active listings as compared to the same month in the past 4 years, but, historically speaking, it did not constitute a huge increase.

Generally speaking, sales volumes dropped in September across the Bay Area by about 18%. September sales declined by something over 17% in San Mateo, but bounced back up in October and were a bit higher than in the 2 previous years. Of course, a surge in new listings in one month will often fuel an increase in sales in the next – with sufficient buyer demand.

October 2018 saw by far the highest number of price reductions in 6 years. Some other counties saw even more dramatic increases. This is an important indicator of changing market conditions, especially if it continues.

The number of expired and withdrawn listings – no sale – jumped in October 2018, well above previous years. December is typically the biggest month of the year for listings being pulled off the market for the mid-winter holiday slowdown. We will see if there are substantial further increases in November and December of homes that sellers have not been able to sell at the prices they currently consider acceptable. One indicator of a changing market is a growing disconnect between buyer and seller expectations.

So far, those listings selling this autumn have generally sold relatively quickly. But this statistic is a lagging indicator and won’t reflect properties that have not yet sold, perhaps after necessary price reductions. If the market is in the midst of a sustained transition, future months may see significant adjustments in this metric.

Average sales price to original list price percentages have been dropping since the height of the spring selling season frenzy. This chart breaks down the percentages by price segment. The overall percentage in October 2018 (not reflected in the quarterly graph below) was 103% (3% over asking price), which was a drop from 107% in October 2017, but it was higher than in October 2016.

Year over year, house sales of  $3 million+ ticked up in August, ticked down in September, and then saw a large increase in October. Overall, sales so far in autumn – in the past 2 months – were up by 25%.

Atherton is the most expensive home market in the Bay Area, except for perhaps the Presidio Heights neighborhood of San Francisco, which is a small city submarket. As in many Silicon Valley communities, values have roughly doubled since the latest high-tech boom began.

There have been high appreciation rates across the board, but Palo Alto has probably seen the highest in the Bay Area. Note that Palo Alto has a much smaller median home size than some other exclusive communities, such as Atherton and Hillsborough, which plays a significant role in dollar per square foot values. All things being equal, a smaller house will, obviously, sell at a lower price, but a higher dollar per square foot value. Atherton and Palo Alto have the highest such values in the Bay Area.

The cities at the northern end of San Mateo County are generally the most affordable. Their prices, dollar per square foot values and home sizes all tend to be markedly lower than the communities further south. To a large degree, that affordability has fueled the heat of these markets. Their central locations – relatively close to both San Francisco and Silicon Valley – have also played a major role.