San Mateo County Housing Stays Hot, But Inventory Surge Signals Shift

Here’s a clear breakdown of what’s happening in the San Mateo County (SMC) housing market from 2024 to 2025 based on data from the MLS for Q1.

Key Highlights:

  • New Listings: Up 16.7% — more sellers are entering the market.
  • Homes Sold: Barely up (+2.6%) — demand is steady but not surging with the new supply. This increases the Inventor levels as buyers are uncertain about the economic future.
  • Inventory: Up a big 57.8% — supply has increased significantly. Bidding wars are waning. This will slow the rate of home appreciation.
  • Average Days on Market (DOM): Down 11.1% (from 27 to 24 days) — homes are selling slightly faster despite higher inventory, suggesting continued demand.

Prices & Valuation:

  • Average Sale Price: Up 6.7% ($2.44M ➡️ $2.61M) — strong upward pressure on prices.
  • Median Sale Price: Up 4.7% ($1.91M ➡️ $2M) — supporting the trend that the broader market, not just luxury homes, is appreciating.
  • Median $/SqFt: Up 3% — price growth per square foot is solid but more moderate, suggesting that larger homes might be contributing to the higher overall sale prices.
  • % List Price Received: Up from 104% ➡️ 107% — buyers are paying even more over asking, indicating competitive offers remain.

Volume & Sizes:

  • Total Sale Volume: Up 9.4%—Higher prices and slightly more sales have lifted the total dollar volume since sales only increased 2.6%.
  • Average Home Size: Up 2.5% (2055 to 2107 sqft) — larger homes selling might be nudging up average prices. If the average home price went up 6.7 % but 2.5% of that was due to larger homes selling, a YOY average sale price percentage would be reduced to 4.2%.

Market Dynamics:

  • Months of Inventory: Up 57.1% (from 1.4 to 2.2 months) — still a seller’s market (under 3 months), but it’s becoming more balanced due to buyer jitters.

Summary Insight:

The SMC housing market in 2025 looks like it’s in a hot but slightly more balanced phase:

  • Supply has risen sharply, but demand is keeping pace (homes are selling faster, prices are up, and bidding is competitive, just not as much so).
  • The increase in larger home sales might be boosting both the average sale price and the sales volume.
  • Inventory is building, which could give buyers slightly more leverage in the coming months if the trend continues.
  • Fed. interest rates remained unchanged.

Commentary: With all the uncertainty around tariffs, buyers are taking the classic “wait-and-see” approach — emphasis on the wait. One thing they’re sure of? Their stock portfolios took a hit… but hey, it’s only a loss if they cash out to buy that house, right? Yet another reason to stay on the sidelines a little longer and let the dust (and the Dow) settle.

The Risk Reward? Buy now while prices are climbing a little and bidding wars are catching their breath — or wait with the crowd for “more certain times” and join the stampede when the bidding starts up full throttle again.

Drew and Christine Morgan are experienced REALTORS and NOTARY PUBLIC located in Belmont, CA, where they own and operate MORGANHOMES, Inc. They have assisted buyers and sellers in their community for over 30 years. Drew and Christine have received the coveted Diamond award and ranked among the top 50 agents nationwide and the top 3 in Northern California by RE/MAX. To contact them, please call (650) 508.1441 or emailinfo@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

This article provides educational information and is intended for informational purposes only. It should not be considered real estate, tax, insurance, or legal advice; it cannot replace advice tailored to your situation. It’s always best to seek guidance from a professional familiar with your scenario.

BROKER | MANAGER | NOTARY

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A trend is emerging wherein sellers opt to exclusively remunerate their own agent, leaving the buyer’s agent compensation subject to negotiation by buyers.

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Unveiling Housing Trends: The New, New Market—Understanding San Mateo County and Belmont Markets – and a 2023 Wrap Up…

Get ready to be captivated by the unveiling of the New, New housing market – a realm that has never been encountered.

Whether you’re already a homeowner or dreaming of becoming one, this end-of-year recap is your golden ticket to exploring the mesmerizing future of Peninsula Real Estate.

Brace yourself for a paradigm shift that might just redefine the real estate game for years to come.

In order to put our New, New market into perspective, a little retrospection is in order. We’re about to unravel the mystery into the feverish ride of the government’s bond-buying bonanza that kicked off in 2008, akin to a superhero swooping in to rescue the struggling housing market and economy from their doldrums but with consequences more obscured by time…

Imagine people in 2013 dancing a jig as they refinance their homes at historically low mortgage rates, hitting new lows every year. Homeowners, practically giddy, were high-fiving each other at snagging a sub 3% rate, watching their mortgage payments take a nosedive, and then going on a shopping spree for new toys like they just won the lottery. 

Ah, the ironic nostalgia hits like a blast from the 1998 dot-com past. It’s like reminiscing about the Internet boom and bust, where Silicon Valley was popping champagne bottles, celebrating a new millionaire being minted every day. It was all glitz and glamour until someone finally shouted, “Hold up, is there even a ‘there’ there?

Now, we’re not claiming to be fortune-tellers, but more than a decade ago, we threw out a warning in this article. We were like, “Hey, if these rates stay low forever, everyone and their grandma will refinance or buy a home at these crazy low rates, and they might never want to move again!” It turns out we might have been onto something.

We did a fast rewind of how our housing market got here in this post back in August of 2023. Fast forward to where we are today…

The 2023 housing market results are now clear. Let’s compare the years and quarters to understand what happened:

San Mateo County (SMC) Overview:

Comparing 2019 to 2023:

  • Home sales went down by 17%.
  • New listing inventory decreased by 16%.
  • Days on the Market decreased by 11% to 25 days.
  • The Median home price went up by 16%.
  • Sellers received slightly less of the asking price, down 1% to 103% of asking.

Comparing 2022 to 2023:1

  • Home sales decreased by 17%.
  • New listing inventory dropped by 20%.
  • Days on the Market increased by 25% to 25 days.
  • The Median home price went down by 5.5%.
  • Sellers received less of the asking price, down 3.7% to 103% of asking.

1The decline in 2023 is emphasized by the unusual increase in home activity during the first quarter of 2022. The market in San Mateo County remained rather flat from Q4 2022 to Q4 2023.

Comparing Q4 2022 to Q4 2023:

  • Home sales were down by 6%.
  • New listing inventory increased by 9%.
  • Days on the Market increased by 15% to 30 days.
  • Median home prices remained unchanged year over year.
  • Sellers received less of the asking price, down 3.9% to 99% of asking.

For Belmont:

Comparing 2019 to 2023:

  • Home sales went down by 23%.
  • New listing inventory decreased by 24%.
  • Days on the Market decreased by 9% to 20 days.
  • The Median home price went up by 25%.
  • Sellers received the same percentage of the asking price.

Comparing 2022 to 2023:

  • Home sales decreased by 13%.
  • New listing inventory dropped by 22%.
  • Days on the Market increased by 33% to 20 days.
  • The Median home price went down by 10%.
  • Sellers received less of the asking price, down 7% to 104% of asking.

Comparing Q4 2022 to Q4 2023:

  • Home sales went up by 9%.
  • New listing inventory decreased by 4%.2
  • Days on the Market decreased by 24% to 22 days.
  • Median home price increased by 2%.2
  • Sellers received more of the asking price, up 5% to 105% of asking.

2What is helping to keep home values steady is the short supply of homes for sale, maintaining the months of housing inventory to approximately a one-month supply.

As We See It

When the government bought bonds to drive down interest rates in 2008, it was a welcome jolt to jump-start a beleaguered housing market and economy.

People could refinance to historically low mortgage rates, which seemed to reach a new low each year. Homeowners were giddy at landing a sub 3% rate, watching their mortgage payments fall by half, and snapping up new toys with their excess pocket money like drunken sailors.

Not that we’re not claiming to be prophets. Still, we were first concerned about this more than ten years ago, correctly calculating that if these low rates remained low long enough, nearly everyone would have refinanced or purchased a home with a historically low rate, which, in all likelihood, would not be seen again in our lifetime.

It didn’t take much prognosticating in our 2013 article to realize that sellers would be reticent to kiss goodbye at their sub 3% rate to get another bedroom when rates returned to historical norms.

The New, New Market

Enter the Pillars of Movement – the mystical forces that shape the real estate universe. In our 2013 article, we saw it coming: When interest rates decide to do a head-snapping reversion to historical norms, sellers won’t be willing to bid adieu to their sub 3% rate just for an extra bedroom. And guess what’s next – the pool of potential inventory shrinks, thanks to one pillar of the housing inventory.

Pillars of Movement

Yet another pillar emerges – one insulated from rate ramifications—the sellers cashing out and saying so long to the Bay Area with pockets full of cash, ready to conquer the world and buy their forever home mortgage-free.

And sure, there’s always the ebb and flow of people coming and going due to job transfers, but only some people leaving want to throw in the housing towel. Because let’s face it, once you’ve left the Bay Area, rejoining the housing game is like trying to win the lottery twice – expensive and seemingly impossible.

Now, behold the last pillar – the legacy homes. Those sacred abodes where families were raised, but now, faced with the ultimate decision for sustainability or the inevitable march of time, these homes hit the market.

As we peer into the future of 2024, a foreseen vision emerges:

  • Anticipate the descent of mortgage interest rates in Q2, beckoning buyers back into the market.
  • This shift is poised to elevate home values, with a forecast of modest increases in housing prices.
  • In this unfolding scenario, both buyers and sellers are likely to acclimate to market interest rates, proceeding with life’s plans.
  • While inventory is projected to see a slight uptick, it is not expected to significantly diminish home values or disrupt the delicate interplay of low supply and high demand.

Drew and Christine Morgan are experienced REALTORS and NOTARY PUBLIC in Belmont, CA. They have assisted buyers and sellers in their community for over 30 years. Drew and Christine have received the coveted Diamond award and ranked among the top 50 agents nationwide and top 3 in Northern California by RE/MAX. To contact them, please call (650) 508.1441 or email info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

This article provides educational information and is intended for informational purposes only. It should not be considered as real estate, tax, insurance, or legal advice, and it cannot replace advice tailored to your specific situation. It’s always best to seek guidance from a professional who is familiar with your scenario.

BROKER | MANAGER | NOTARY

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HOUSING MARKET DIPS REMAIN IN THE MIX AS NEW LISTINGS CONTINUE TO DROP

Though the landscape may appear bleak to some, to others, doors have opened to greener pastures offering new market opportunities.

We guessed correctly that around this time, home prices would start to look more like they did a year ago than two years ago.

Looking in the rear-view mirror, home prices hit their all-time high in April of 2022 before beginning what would be a reverse of fortune for sellers over the next year.

WHERE ARE WE NOW

Most indicators remain down over last year, but not so much in the price decrease department. What has taken a hit is the inevitable drop in sellers choosing to move for fear of losing their low fixed mortgage rate.

Take Belmont, for example. The number of new listings dropped 27% YOY as compared to June 2022. 

The Inventory—or the number of homes left for sale at the end of the month dropped 56%, a strong indicator that there is still strong demand for homes.

One more home sold this month than last year, which is statistically insignificant, but it underscores that our meager inventory is moving.

The days a home is on the market is back to a more normal 12, up from eight when the bidding frenzy in Q1 of 2022 was at its peak.

The percent a seller receives of the asking price is around 105%—down from 107% a year ago, but still indicating overbidding on select homes.

The Belmont median home price is down 12.3% YOY, as some air escapes from the brief bubble in 2022.

San Mateo County fared about the same:

News listings declined 27%

Inventory dropped 30%

Sales were down 8%

The median home price came down 5%

And the time it took to sell a home increased by 50%

We still have less than one month of housing inventory in Belmont and 1.4 months in San Mateo County, which is lower than the rest of the country by about five months.

Currently, half of the homes being sold are fetching prices above the seller’s asking price, indicating the presence of multiple bids, while the other half are selling for less. Sellers are still receiving lower prices than they could have obtained a year ago during the brief bubble. However, given the rapid 14% price increase in the first three months of 2022, it is evident that there was considerable room for a market correction.

With prices rising by 14% in the first quarter of 2022, it was anticipated that a portion of the price surge would not be sustainable.

TAKE AWAY

Interest rates have increased again recently and will probably stay at these levels for the remainder of the year. That’s not helping buyers or sellers. Buyers can afford less home, or less expensive homes, and sellers don’t want to move, which puts more pressure on holding home prices at bay.

Since the local housing market heavily relies on the interplay of supply and demand, if interest rates remain high and an increase number of sellers feel compelled to sell, the growing inventory of homes for sale will intensify the pace of home price decreases.

We understand how difficult it is to try and time one’s life around the housing market—whether to move now or later and what would be optimal. Two things will impact the housing next year that we can anticipate. With the Presidential Election, we expect a repeat of diminished housing market activity as we near summer. And mortgage interest rates are expected to come down. This may entice more sellers into the market, diluting the pool of possible buyers for homes. If you are considering a move, be sure to contact us soon so that we may advise you early on as to the best time next year to sell.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

Drew Morgan, Broker Associate 01124318 | Christine Morgan, Sales Associate 01174047

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Embracing the Benefits of Induction Cooktops: A Closer Look at the Advantages Over Gas Stoves

We frequently come across a condominium that doesn’t have gas for each unit, or at least none was installed to be accessible for cooking appliances. This is worrisome for some buyers, but they may see the benefits of using an induction-style electric cooktop over the more common gas with the right education.

As an ex-chef, the thought of ditching my gas stove and going back to electric caused me to be highly skeptical. That is, until I bought one to use on our RV.

One of the first things I noticed was that the cooking is very precise. For example, if I want to cook scrambled eggs, instead of guessing the temperature needed to cause an egg to solidify, on our induction cooktop, we can just set the temperature, in this case, to 150℉ degrees, and know that it will never get any hotter—no more scorched eggs. In this way, it offers benefits similar to sous vide cooking, wherein one can exactly control the temperature of the cooking process.

Adjusting the temperature can be based on the desired heat instead of guessing how much flame one needs.

One downside we can see is in cooking in a Wok, where one needs extremely high heat and heat that transfers to the side of the cooking vessel. Another issue is sauteing foods. The term sauté literally translates into “jump up”, as you lift the pan off of the heat to toss it around. With an induction stove that requires the pan to be in direct contact with the cooking surface or it will temporarily shut off, sauteing won’t be as practicable as with a gas stove top.

Several cities in California have taken steps to restrict or phase out the use of natural gas in new buildings. For example, Berkeley, San Jose, and San Francisco have been trying to implement regulations requiring new buildings to be all-electric, meaning they cannot use natural gas for appliances like stoves, water heaters, and furnaces (Note: in April of 2023 the 9th U.S. Circuit Court of Appeals found the ban in Berkeley to be in direct violation of the Energy Policy and Conservation Act of 1975).

It’s important to note that local regulations and policies can change over time, and it’s always advisable to check with the relevant authorities or consult the most up-to-date information to determine the specific regulations in effect.

These measures attempt to combat climate change and reduce greenhouse gas emissions. Natural gas is a fossil fuel that contributes to carbon dioxide emissions and is a significant contributor to global warming.

Gas stoves can contribute to indoor air pollution and pose certain health risks. Here are some reasons why gas stoves can be considered unhealthy:

  • Indoor air quality: Gas stoves emit pollutants such as nitrogen dioxide (NO2), carbon monoxide (CO), formaldehyde, and particulate matter into the air when they burn natural gas or propane. These pollutants can accumulate indoors and lead to respiratory problems, especially in poorly ventilated areas.
  • Respiratory issues: Prolonged exposure to the pollutants emitted by gas stoves can irritate the respiratory system and worsen existing respiratory conditions like asthma and allergies. NO2, in particular, can cause inflammation of the airways and decrease lung function.
  • Carbon monoxide poisoning: Inadequate ventilation or malfunctioning gas stoves can lead to the release of carbon monoxide gas, which is colorless and odorless. Inhalation of carbon monoxide can be fatal, causing symptoms like headache, dizziness, nausea, confusion, and even death in severe cases.
  • Fine particulate matter: Gas stoves generate fine particulate matter (PM2.5), which consists of tiny airborne particles. These particles can penetrate deep into the lungs and potentially cause respiratory and cardiovascular problems.
  • Increased risk for children: Children, particularly infants, are more vulnerable to the health effects of indoor air pollution. Exposure to pollutants from gas stoves can impact lung development and increase the risk of respiratory illnesses.

To mitigate these risks, it is important to ensure proper ventilation when using gas stoves, such as using exhaust fans or opening windows. Regular maintenance of gas stoves, including cleaning burners and checking for gas leaks, is also crucial. Additionally, using alternative cooking methods, such as electric stoves or induction cooktops, can help reduce indoor air pollution associated with gas stoves.

Induction stoves offer several benefits over gas stoves. Here are some of the advantages of using an induction stove:

  • Energy Efficiency: Induction stoves are highly energy efficient. They directly heat the cookware using electromagnetic fields, which means almost no heat is wasted. In contrast, gas stoves lose significant heat to the surrounding environment, resulting in energy wastage.
  • Faster Cooking: Induction stoves heat up significantly faster than gas stoves. The electromagnetic fields directly transfer heat to the cookware, allowing for rapid heating. This speed can save you valuable time in the kitchen.
  • Precise Temperature Control: Induction stoves provide precise temperature control. You can adjust the heat levels instantly and accurately. This precise control allows for more delicate cooking tasks, such as simmering or melting chocolate, where precise temperature management is crucial.
  • Safety: Induction stoves are generally safer to use compared to gas stoves. The stovetop surface remains relatively cool since the heat is generated in the cookware itself. This feature reduces the risk of burns and accidental fires. Additionally, induction stoves often have built-in safety features like automatic shut-off, pan detection, and child-lock functions.
  • Easy to Clean: The smooth and flat surface of induction stoves makes them easy to clean. Since the stovetop doesn’t get as hot as gas stoves, spills, and food residues are less likely to get burnt onto the surface. This feature simplifies the cleaning process and reduces the time and effort required for maintenance.
  • Aesthetics and Design: Induction stoves are often sleek and modern, adding an aesthetic appeal to your kitchen. They come in various sizes and styles to suit different kitchen layouts and personal preferences.

It’s worth noting that while induction stoves offer many advantages, there are a few considerations to keep in mind. Induction stoves require cookware with magnetic properties (ferrous metal) to work effectively, so you may need to replace some of your existing cookware. Additionally, the upfront cost of induction stoves is typically higher than gas stoves, although they can help save on energy costs in the long run.

According to the New York Times, if you are interested in transitioning to induction cooking, these are the top-rated induction cooktops.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

or all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Recognizing the Flaws in Comparing Year-Over-Year Data

Back in November 2022, we wrote an article titled “The Big Risk in Gambling on Bay Area Home Values” where we predicted that this day would come. We expected that Q1 in 2023 would see a significant decrease when compared to 2022 but are we comparing apples to apples? We suspect that by Fall, the year-over-year changes will be more accurate since the first three months of 2022 were an anomaly due to a surge in home prices (not values).

Last year in April, the Bay Area housing market reached its highest point, driven by the fear of impending interest rate hikes. However, since May 2022, there has been a decline in the market. The decline can be attributed to the interest rate increases, which ironically is what led to an increase in housing values in the first quarter of 2021.

This unsustainable and rather sudden ramp-up in bidding wars, and consequently home values, ended rather abruptly in mid-April.

The May sales data reflected the change in home-buying activity, and the shift in the market was in full swing by June. We discussed this in our blog post titled “Bay Area Housing Market on Precipice of Unpredictable Change.”

Currently, in San Mateo County, home values have reverted to levels seen in August of 2022.

Comparing the months of April YOY for San Mateo County, the dramatic shift is seen across the board in almost every category. 

Fewer sellers are willing to sell in today’s market because as most have locked into fixed-rate loans in the 3% (or even less) range. 

With fewer sellers willing to move, the number of new listings is down 38%. In any other market, this alone would create a shortage of inventory of homes for sale which in turn would drive up prices. However, the higher interest rates that are keeping sellers in their homes longer, are also eroding the purchasing power of buyers. This is helping to keep our market near equilibrium—a state which historically is rarely seen, and if so, never for very long.

We notice a similar trend in the city of Belmont, but it’s more pronounced because the sample size is small, which makes fluctuations more noticeable.

Opposite the Law of Large Numbers, a foundational concept in statistics that if a sample is large enough, the sample average should be close to the mean, the law of small numbers provides us with a “Belief in the Law of Small Numbers.” In their paper, Kahneman and Tversky—who famously explored human heuristics, define the Law of Small Numbers as the mistaken belief that a small sample accurately reflects the probabilities of a population. In small data sets, you can find patterns where none exist!

Such is often true when isolating the numbers for home sales in Belmont.

Here we note the magnified effect of the market as compared to San Mateo County as a whole.

That said, there’s no doubt about the YOY change. In 2023 the size homes that sold were 22.5% larger, yet sold for 7.7% less, indicating the true YOY value shift to be close to a 30% drop.

The average time it takes to sell a house has increased by 200%, which shows that buyers are becoming pickier. However, it’s also happening because many sellers are still setting their prices based on past market conditions and pricing their homes too high.

It’s unfortunate that some agents prioritize making a sale over being honest with the sellers. They may tell the sellers what they want to hear, instead of what they need to know. Additionally, sellers often choose agents based solely on the price estimate the agent gives them for their home, which perpetuates this behavior.

At present, the inventory of homes available for sale is only enough to last for about a month. This is a notable decrease from the 9.5 months of inventory during the 2008 economic crisis.

As we move past April, the monthly figures will gradually approach and eventually exceed the year-over-year numbers of 2023. However, we do not anticipate this to occur until the year 2024.

It is imperative that you price your home correctly if you are considering selling it. This holds especially true in the current market. Do not hesitate to contact us for an honest evaluation.

Drew and Christine Morgan are experienced REALTORS and NOTARY PUBLIC located in Belmont, CA. They have been assisting buyers and sellers in their community for over 30 years. Drew and Christine have received the coveted Diamond award and ranked among the top 50 agents nationwide and top 3 in Northern California by RE/MAX. To contact them, please call (650) 508.1441 or email info@morganhomes.com.

or all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

This article provides educational information and is intended for informational purposes only. It should not be considered as real estate, tax, insurance, or legal advice, and it cannot replace advice tailored to your specific situation. It’s always best to seek guidance from a professional who is familiar with your scenario.

The Illusion of Year of Year Numbers

Housing Sector Finally in Balance?

It seems like forever since the housing market has been in balance. The downturn in 2007-2009 was followed in 2012 by an 11-year run up in Bay Area home values. Are we finally reaching equilibrium?

The first quarter of 2023 is in the books, and the housing numbers are in. If you’ve been listening to local news, one might believe the housing market is on a slippery slope and headed towards a trough.

The numbers sure make it look that way too, but is there more to report? The short answer is, there always is.

Looking at San Mateo County as a whole, here are the YOY (Year over Year) numbers comparing 2022 to 2023:

In every category the numbers appear to indicate that we’re in a declining or buyer’s market, but we’re not. Why?

Half of the homes are still selling for over asking, while the other half are selling for less, which is strongly indicative of a market in balance. Take a look at these graphs we prepare–they show the market is beginning to level out.

NEW LISTINGS

This number is down because sellers with 3% interest rates are reticent to sell their current home only to find their new mortgage on a replacement property closer to 6%. This decline was amplified by the historically inclement weather.

INVENTORY

This is a measurement of how many homes remained for sale at the end of the measured period. This is showing us there were fewer homes left over at the end of the quarter, which didn’t sell.

SOLD HOMES

The number of sold homes is actually very close to the number of fewer homes that were listed for sale. It’s like a car lot—if they have fewer cars on their lot to sell, they’ll sell fewer cars. In 2023, note that there were ~36% fewer homes available for sale, but only 31% fewer sales, which is consistent with the inventory of remaining homes being lower in 2023.

AVERAGE DOM

Homes are taking longer to sell. While there are fewer homes to choose from, there are also fewer buyers that are willing to purchase a home—creating for the first time in a long time, a balance in supply and demand.

A side note on why homes are taking longer to sell is twofold—sellers who are in denial that they missed the peak price point from 2022, and agents who have never worked in a more regular market, and will take any listing at any price also in denial that the market has changed.

The days of an on average six-day period of marketing are gone for the foreseeable future. In fact, six days on the market was also an anomaly. Last year at this time six days was all that was needed to sell a home with the incredible amount of urgency to beat rate hikes. In 2021 for example, the days on market during this period was 25. This year it’s at 32—higher, but again not astoundingly.

MEDIAN SALE PRICE

The median sale price is for the entire county, so what may be happening in your city or even neighborhood is probably different. 

The YOY drop of 11.8% from 2022 and the Price per Square Foot drop of 11.4% are fairly close to each other indicting that this can be considered to be a reliable measurement of the drop in home values between these two periods. If these two categories were off by a substantial amount, it would indicate a shift to smaller or larger homes selling in the two periods. We frequently run into this type of shift when measuring small market samples in smaller cities and when looking at only one month of sales for example.

THE INSIDE SCOOP

Here’s where it gets interesting. While the media may be accurately reporting these numbers, they do not put them into perspective, which in some cases such as this, a whole new story emerges.

Misleading Interpretations of the Housing Market

This is a classic example of a financial group trying to interpret the data and missing the mark on several key points.

In fact, the median homes prices are lower, and they should be, because they are being compared to Q1 in 2022 which saw the fastest run up in home values in the history of the Bay Area (see next paragraph for a deeper dive). We did an article on why this happened last year and predicted that this year would pale in comparison and exacerbate the apparent decline in values—which is exactly what happened.

We also went on to forecast that once we get past the May numbers in 2022—when the April sales of 2022 peaked and were reported—we may see an actual YOY increase in 2023 over 2022 as the summer and fall approaches, as that’s when in 2022 home prices began to decline.

LIST PRICE TO SALE PRICE RATIO—Making Sense of it All

The decrease in multiple offers has clearly has an impact on homes selling for over their asking price, as seen in recent, previous years. 

While homes sold on average for 114% of asking in Q1 of 2022—that wasn’t normal—it was an anomaly. 

It was due to the sudden demand in housing in 2022 fueled by the fear of looming interest rate hikes. Looking at the same period in 2022—January through April—homes sold for on average 106% of asking in 2021. In 2023 the percentage over asking was 101%—so eliminating the frenzied run up in 2022, the percent over asking is still lower than average, but by only 5 points instead of 11.

MONTHS OF INVENTORY—What does that mean?

The Months of Inventory statistic shows us, at the current rate of homes sales, how long it would take to sell the current inventory of homes.

A normal Months of Inventory, if we average San Mateo County’s inventory levels dating back to 1998, is 2.6 months. Nationwide wide they hover around six months of inventory. 

During the financial crises of 2007-2009—from peak to trough the inventory levels of homes for sale in San Mateo County stood at 5.2 months.

In Q1 of 2022 they were only 1.3=2 months of inventory and that has bumped up to 1.7—still far below historical averages.

Locally, the story is much the same in our two of Belmont, but, since the sample size is so much smaller, the swings in statistical categories can appear skewed, and over or underrepresent the overall housing pattern in the Bay Area.

Belmont Home Prices

The Take-Away

  • In San Mateo County, the housing market has slowed from its Q1 2022 peak.
  • If the economy stays the way it is now, in Q2 the YOY numbers will be more similar.
  • We expect to see demand increase for housing as buyers become accustomed to higher interest rates.
  • We imagine that in Q3 the median home value may be similar to 2002.
  • The historical inclement weather has kept a lid on new listings—we expect this to increase as weather improves. More homes for sale will keep a ceiling on home appreciation as the market shift deeper into buyer territory.
  • The stats show the market shift in the buyer’s favor has created a more balanced housing market.
  • There is no metric that compares to the financial crisis housing depreciation in 2007-2009

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.

Most People Enjoy Rollercoaster Rides, Except when it Involves their Financial Future

Last year was a wild one, but not entirely unpredictable, as we forecast in December of 2021.

Like our recent unprecedented storms, the factors that led to the abrupt housing market shift in the second quarter of 2022, created the perfect storm for a change in the market—not a correction—a change or shift.

In Perspective

After the pandemic stay-at-home order created a need for more space to work from home with many home-schooling children, the new skyrocketing demand for single family homes caused prices to follow suit.

In the first quarter in 2022, we saw an unprecedented run up in home values in our area. Never in our history had home values risen so fast in such a short period of time.

This was to some degree anticipated, as it was widely announced that interest rates would be rising in the upcoming year—this on the heels of desperate attempts to secure a home in 2021 made for bidding wars outpacing sustainability.

In April of 2022, with mortgage interest rates rising to levels not seen since the same time in 2009 during the Great Recession, a pullback began as affordability suffered.

April sales logged the highest prices ever in our area’s history. These sales closed in May, making April technically the pinnacle of home values.

Then it began to slip.

Prices dropped each month-over-month, but-remained higher than a year earlier. In other words, the Year-Over-Year numbers until October remained higher than the previous year.

This is the YOY comparison for December of 2021 to 2022. In every category the housing numbers are unveiling a softening in the housing sector—prices are down, days on market are up, etc.

Note that the size homes selling in these two periods exaggerates the actual drop in values, while antithetically, the price per square foot underrepresents that delta.

We can make a rough “back of the napkin” adjustment, accounting for smaller homes selling in the two periods and skewing the median home price. Note that the median home price dropped 32% but so did the size homes which sold. Adjusting for this, the actual median home price is likely flat YOY, insofar as the median price anyway.

VARIABLES TO A 2023 HOUSING MARKET REBOUND

JOBS AND UNEMPLOYMENT

As one can see by this graph, unemployment in San Mateo County is at or near an all-time low:

Yet Tech specific lay-offs, effect our local housing disproportionally than elsewhere, as many local tech jobs are located on the Peninsula. When workers in the tech industry see companies laying workers off they tend to go into hibernation, avoiding any large purchases that require a long-term commitment.

STOCK OPTIONS

Many of these same companies offer sizable salary offsetting stock inducements. When there’s a hit to their portfolio, tech buyers will tend to wait it out for more favorable withdrawal conditions. And those who bite the bullet and cash out, lose buying power when their portfolio is down.

INTEREST RATES

While interest rate hikes shocked the system of buyers to their core, the initial wave began in January of 2022, enticing a lot of buyers who could see the writing on the wall to jump into the market to secure a low mortgage rate, even if doing so meant overpaying for a home. 

Later, the rising rates had a real effect on housing, as we entered a return to normalcy—wiping out the entire first quarter of home value increases in a matter of months.

THE STALEMATE

Some buyers are holding onto the notion higher interest rates will continue to put downward pressure on home values, while sellers, still stuck in the first stage of grief—denial—are holding out for a return to the glory days of early 2022.

Who will blink first? It’s anyone’s guess. But the overall healthy economic conditions, despite the aforementioned variables, may lean in the favor of buyers returning to the market as soon as they feel confident and comfortable in the economic environment.

MOVING FORWARD

In an effort to thwart a complete housing melt down in 2007, the government bought bonds to drive down interest rates and the FED overnight rate was held at zero.

Buyers will no doubt soon begin to realize that they are not going to see artificially induced low mortgage rates again anytime in the foreseeable future—if ever, and will begin to accept the new reality.

Sellers will stop bemoaning missing the height of last year’s market, and eventually decide to move ahead with life’s plans.

Past performance doesn’t guarantee future results, but we can see patterns that emerge. We wouldn’t be surprised to see home values remain more-or-less flat for the year in 2023, and overall sales remain down.

Drew & Christine Morgan are REALTORS/NOTARY PUBLIC in Belmont, CA. with more than 30 years of experience in helping sellers and buyers in their community. As Diamond recipients, Drew and Christine ranked in the top 50 RE/MAX agents nationwide and the top 3 in Northern California.  They may be reached at (650) 508.1441 or emailed at info@morganhomes.com.

For all you need to know about Belmont, subscribe to this blog right here. You can also follow us on Facebook and on Twitter.

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.