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San Mateo County Real Estate

January 2020 Report

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Generally speaking, after years of high appreciation rates, annual 2019 Bay Area median home prices went down a little bit, went up a little bit or basically remained unchanged as compared to 2018. San Mateo County was one of the markets that saw no year-over-year change.

For 2020, economist Ken Rosen at UC Berkeley has said he expects the Bay Area median price to remain basically flat, within a general range of up or down 2% - in other words, similar to what happened last year. We can’t predict the future, but that doesn’t sound unreasonable, and happily avoids the sensationalism of many other media-grabbing forecasts.

Median sales prices are generalities and not exact measurements of changes in fair market value. They can be affected by a number of factors and are sometimes subject to anomalous fluctuations. This is especially true of very affluent communities - such as Atherton, Woodside and Portola Valley - that have relatively few sales across a very wide range of sales prices.

How they apply to any particular home is unknown without a specific comparative market analysis.

Economic Factors Affecting

Real Estate Markets

San Mateo County Real Estate

December 2019 Market Snapshots

Bay Area Home Prices & Market Sizes

San Mateo & San Francisco have been alternating for the highest median house sales price in the Bay Area. In Q3, SF took first place.

Home Price Appreciation in the Most Expensive Markets of San Mateo & Santa Clara Counties

This next chart looks at estimated percentage appreciation since 2012 in the most expensive markets of the 2 counties. This graph does not delineate prices, which vary enormously, only percentage home price changes over time. According to this calculation, the last peak in prices occurred in the first half of 2018.

Bay Area Markets for Homes of $5 Million+

San Mateo is not one of the largest markets in the Bay Area by number of sales (see pie chart above), but it is the largest market for homes selling for $5,000,000 or more.

Market Seasonality: New Listings

Coming on Market

The market is now deep into its seasonal plunge in activity, which hits its nadir in December.

Estimated Median Home Value Trends by City

The following charts reflect estimated calculations of median home price trends since 1996 by an algorithm created for that purpose. As always, these numbers should be considered very general approximations of prices in complex markets containing homes of widely varying size and quality.

Due to the large drop in interest rates since Q4 2018, and some declines in median house prices, housing affordability - the percentage of households able to afford a median priced home with 20% down and a loan at prevailing interest rates - has ticked up in recent quarters.

Average Days on Market

- County & City

Average Sales Price to Original List Price %

County & City

Percentage of Listings Going into Contract

in Quarter

Price Reductions by Month -

San Mateo County

San Mateo County Real Estate

Home Prices by City; Short-Term & Long-Term Appreciation Trends; Migration In & Out of County; Price Reductions; Luxury Home Sales

September 2019 Report

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After the heat of the spring market, activity typically slows down markedly in July and August. In September, listings start pouring on the market again to fuel the relatively short autumn selling season - in fact, September is sometimes the single month with the highest number of new listings. What occurs in the next 2+ months, before the mid-winter holiday doldrums begin, will be the next major indicator of market conditions and direction.

Median Home Prices by City

People Moving In & Out

of San Mateo County

Using new U.S. Census estimates released 8/29/19, this chart attempts to identify U.S. counties, states and international regions with the highest number of residents migrating to and from our county. In the Bay Area, there is a general trend outward from more expensive to more affordable places, while in-bound migration is deeply affected not only by exchanges between Bay Area counties, but people arriving from other parts of the state, country and world. Areas often have large two-way exchanges of residents.

Foreign in-migration is a huge issue in the Bay Area, but it will be another year before any impact of new U.S. immigration policy on foreign in-migration in 2018 shows up in census numbers.

The census estimates foreign in-migration in this analysis, but not foreign out-migration.

Median House Sales Price Trends -

Selected San Mateo County Cities

In 2019 YTD, some cities median sales prices are up a little, some down a little, and some about the same as in 2018. For the entire county - illustrated later in this report - the median house sales price is virtually unchanged. Note that some cities - such as Redwood Shores and Atherton - have relatively few sales, which makes their median prices more prone to anomalous fluctuations. Full year 2019 prices may well be significantly different than the YTD prices below.

Short-Term & Long-Term Trends in

County Median Home Values

Selected Market Indicators

The chart below compares supply, the number of active listings on the market, with demand, as measured by the number of sales. This is a seasonally adjusted graph that smooths out normal monthly fluctuations to provide clearer historical trend lines. As context, the data below begins in 2013, after the market recovery was already well underway. If the data went back to the 2009 – 2011 period, during the post-crash market recession, the divergence between the two lines would be much, much greater than at any time illustrated here.

Trends in Price Reductions

The next chart measuring unsold inventory helps give greater context to market conditions and changes. The ups and downs since 2012 are relatively minor compared to the situation that prevailed during the 2008-2011 market recession, when monthly unsold inventory figures were highly elevated.

Bay Area Luxury Home Sales

San Mateo County has the second largest luxury home market in the Bay Area - after much more populous Santa Clara County - and the largest for "ultra-luxury" homes selling for $5 million and above.

San Mateo County Real Estate

Sales & Values by City and Price Segment, Market Seasonality, Market Dynamics by City, Luxury Home Sales, Foreign Homebuyers

August 2019 Report

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The May Case-Shiller Home Price Index was released in late July for the 5-county SF metro area. This chart illustrates the difference in appreciation rates between the Bay Area (higher price markets) and the entire country. Case-Shiller does not use median sales prices but its own algorithm to calculate appreciation. January 2000 home price = 100; 250 = a home price 150% above that of Jan. 2000.

Needless to say, there are many factors behind home sales and values in different communities. Home size is one of them, and median sales prices are not apples to apples comparisons: For example, in Atherton, the median house is over 4000 square feet, while in East Palo Alto, it is approximately 1300 square feet.

Note that median sales prices often peak for the year in Q2.

Home Sales by Price Range

Average Dollar per Square Foot Values

All things being equal (which they rarely are), a smaller home will sell for a higher dollar per square foot value. However, Atherton has the highest median home size (and price) and the highest dollar per square foot value. It probably has the largest average lot size as well - which is another big factor.

The Luxury Home Market

Menlo Park and Hillsborough dominate home sales of $3 million and above in San Mateo County, but Atherton - the most expensive city in the Bay Area - dominates home sales at the very highest prices.

The luxury home market is even more affected by seasonality than the general market (which is discussed later in this report). September typically sees a large surge in new listings which fuels the autumn selling season. High-price homes that don't sell by Thanksgiving are often then pulled off the market to wait for the winter holiday season to pass.

Market Indicators by City

Two things should be kept in mind regarding the next 3 charts: 1) Q2 is often the highest demand market of the year, which will be reflected in the statistics illustrated, and 2) It is not unusual for higher price markets to have softer demand dynamics than more affordable areas. Needless to say, there are many fewer buyers for the most expensive homes, but also, overpricing is a more common issue with such homes. Still, in every city and price segment, there are homes that sell very quickly, homes that go through price reductions, and homes that don't sell at all.

Market Seasonality: The Autumn Spike,

Then the Winter Doldrums

Market activity usually slows during the late summer months, then spikes back up for the relatively short autumn selling season. This typically begins with a surge of new listings coming on market in September. Come mid-November, activity commonly plunges for the winter holidays, and the market won't wake up until late January or February - though homes continue to sell in every season.

Foreign National Home Buying Tumbles

According to a new report by the National Association of Realtors - based on a survey of its member agents - the purchase of U.S. homes by foreign nationals plunged in the 12 months through March 2019. The drop was particularly steep for Chinese nationals, for whom California has been the top destination.

Stock Market Hits New High

The last 12 months have been an extremely dramatic time for financial markets as illustrated below. The alternating confidence and fear generated by its swings have been considerable factors in Bay Area real estate markets. A parallel dynamic has occurred with the swings in interest rates.

The San Mateo County

Real Estate Market

High stock markets, low interest rates, surging luxury home sales, a spring full of local IPOs, and San Mateo County hit a new high in median house sales price (by a nose).

July 2019 Report

San Mateo County real estate saw a strong Q2 market, though, generally speaking, not quite as competitive as the white-hot market in the first half of 2018. The median house sales price bounced back up to slightly exceed the previous peak in Q2 2018, and thus return to positive year-over-year appreciation after the small decline in Q1 2019.

The luxury home market was very strong - the stand out segment - surging to dramatic new highs in sales volumes this spring, mirroring a similar dynamic in San Francisco.

The market typically begins to slow down for summer after the spring selling season ends, though homes certainly continue to sell.

Median Home Prices

San Mateo Luxury Home Sales

Selected Supply & Demand Statistics

Sales volume jumped back up from its mid-winter nadir, but remained somewhat lower than volumes seen in the previous 2 springs.

The next four charts generally indicate solid buyer demand in Q2, but also illustrate the differences between this past spring and the extremely heated demand seen from spring 2017 through spring/early summer 2018.

Overpricing: Negative Ramifications for Sellers

& Opportunities for Buyers

We performed longer-term analyses of the effects of overpricing - as indicated by the need for price reductions before the property sold - on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also very substantial differences in the average dollar per square value realized upon sale - and the hotter the market, the larger the percentage decline in dollar per square foot value that accompanied price reductions. This is almost certainly due to missing out completely on the sales-price-enhancing effects of overbidding.

So, overpricing typically lowers values for sellers, which also signifies opportunities for buyers who keep their eyes open for price reductions and react accordingly.

Mortgage Interest Rates Hit Multi-Year Lows

A Critical Dynamic in Affordability & Buyer Demand

We not only mapped Bay Area median house sales prices, but ranked them, lowest to highest. Unsurprisingly, certain San Mateo, Santa Clara and Marin cities, and various San Francisco neighborhoods dominate the upper end. If interested, click on the button link below: The ranking list can be found below the map.

Bay Area Home Prices

San Mateo County Real Estate

Strong spring market brings median home sales prices bouncing back to 2018 peaks. San Mateo luxury home sales hit new high.

June 2019 Market Report

Short-Term Median House Sales Prices

This spring and last spring both had months with unusually large spikes in median sales prices, which should be considered abnormal but certainly speak to a prevailing high demand dynamic. June sales will mostly reflect accepted-offer activity in May, and it will be interesting to see that final bit of Q2 data. Quarterly data is more meaningful than monthly data, which is much more prone to anomalous fluctuations.

Market activity typically begins to significantly slow for the summer, hitting its mid-year low in August.

Long-Term Median House Sales Prices

San Mateo County Luxury Home Sales

Sales of homes selling for $3 million and above hit a new monthly high in May 2019, well above the previous peak in May 2018. Taken together, April-May sales are 15% higher on a year-over-year basis. San Francisco had a similar spike in high-price homes. In fact, market dynamics in the two counties have been quite similar this spring: Both have also seen median price bounces up to, but not significantly above last year's highs.

Median Home Price Changes

in Selected County Markets

Comparing annual median home prices to partial year prices is not really an apples-to-apples comparison because of the effect of market seasonality on sales prices. Some cities are up a little, some down a little, and some are basically unchanged - it mostly speaks to a basic stability in county home prices. Atherton saw a big increase in median sales price, but that is based on a relatively small number of sales. (Atherton is the most expensive housing market in the Bay Area.)

Full-year 2019 median home prices may be significantly different than the year-to-date figures.

City Median House Prices by Bedroom Count

Click on the button-link below to go to our updated map of Bay Area median house prices.

Bay Area Home Price Map

Selected Market Indicators

April-May sales volume is almost the exactly the same year-over-year.

Average days on market are well up from the historic lows of spring 2018, however they are not high by long-term standards. Still, it does speak to some year-over-year cooling in the intensity of demand.

Overbidding is significantly down from the extremely high levels of last spring, and buyer competition - bidding wars - for new listings is perhaps the single biggest factor in home price appreciation.

Selected Economic Snapshots

This next chart graphs Bay Area unemployment rates from 1990 through January 2019. By April 2019, they had typically fallen another half percentage point.

Bay Area housing affordability – the percentage of county households that could afford to buy a median priced house with a 20% down-payment – ticked up in Q1 2019 due to the significant drop in interest rates, and, in some counties such as Santa Clara and Sonoma, a year-over-year decline in median house sales price. The affordability percentage in San Mateo County is among the lowest in the country.

San Mateo County Real Estate

Spring Market Heats Up,

But It's Cooler than Spring 2018

May 2019 Report

With April’s end, we now have 2 months of spring season data unaffected by market activity at the end of 2018, when financial markets plunged. As of early May 2019, stock markets have recovered to hit new highs, interest rates are far lower than last year’s peak, and unicorn IPOs have begun to roll out after a media frenzy of speculation on their potential effects on our real estate markets. However, so far, median home sales prices have not quite returned to the peaks seen during the ferociously hot market of spring 2018. This is a big change from the substantial year-over-year appreciation rates of the past 6-7 years.

This is a relatively common dynamic around the Bay Area - in fact, many counties have seen more cooling and slowing than San Mateo County. And, of course, the spring selling season is not yet over.

Monthly Median House Sales Price - 2 Years

For the time being, home prices in the most expensive housing markets in the country - San Francisco and San Mateo Counties - have stopped getting more expensive. But that is not a prediction for what may come.

Year-over-Year Comparisons

This table compares the March-April market statistics of 2018 and 2019. Some indications of a softer market in spring 2019 across most of the statistics measured, though luxury home sales ticked up year over year.

Two months would still be considered very short-term data.

Home Sales by Price Segment & Bedroom Count

An illustration of the last 12 months of house, townhouse and condo sales broken out by price range and number of bedrooms.

Home Sales, Prices & Sizes by City

The next chart breaks out the number of house sales over the past 12 months by city, with median house sales prices, median square footage, and median bedroom/ bathroom count. (Median means half the sales were for more, or larger, and half for less, or smaller.)

Below is a review of sales, prices and sizes specifically for 2-bedroom, 2-bath condos. (The first bar refers to the city of San Mateo.)

Luxury Home Markets -

San Mateo & Santa Clara Counties

The number of home sales of $3 million+ by price segment, average dollar per square foot value, and median square footage. The Silicon Valley luxury home market is by far the largest in the state.

Q1 2019 "Ultra-Luxury" Home Market -

San Mateo County

We typically define the "ultra-luxury" market as starting with prices of $5 million. This is a glimpse at dynamics during the 1st quarter of the year. Note the differential between median sales prices and median list prices, especially for those listings that expired without selling. Of course, the higher the price, the smaller the pool of potential buyers.

Q2 is typically the most active quarter of the year for luxury and ultra-luxury home sales.

Home Size & Era of Construction

Many factors influence home construction size during any particular period: Affluence, economic conditions, household size, buyer age, land costs, population growth, highway construction, natural disasters, etc. Generally speaking, the median size of houses built earlier in the 1900’s was somewhat larger than those constructed mid-century during the WWII-and-right-after boom. It then started increasing again, and now, newly built houses are larger than ever.

Note that the figures below are based on recent home sales, and that over the intervening time since original construction, adding a second bathroom and/or a third bedroom behind the garage to older homes were popular renovations.

Over the past few decades, condos have become a major alternative for people purchasing homes of smaller size.

Selected Demographic & Economic Factors

Population Growth

New census figures have just been released: The latest surge in county population began 10 years ago with big increases through 2015/2016, increases which paralleled the tremendous jump in high-tech hiring. However, in the last 2 years through mid-2018, annual growth figures began to markedly slow.

By number increase, San Mateo County ranks 5th (adding almost 50,000 residents), and by percentage increase, 6th (+7.1%) in the Bay Area for population growth since 2010.

As a point of comparison, from 1940 to 1960, the county's population went from 112,000 to 444,000, equaling almost 300% growth over the 20 years. New homes were being built as fast as they could be framed up.

Commuting

Venture Capital Investment

In recent years, the Bay Area has been the biggest destination of venture capital investment dollars in the country - and probably the world. These tens of billions of dollars have constituted a massive factor in the local economy, supercharging the creation of new companies, hiring, and, eventually, IPOs. Ultimately, venture capital is seed money that in the last decade has exploded into the creation of stupendous amounts of new wealth.

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

San Mateo County Real Estate

Home Prices, Sales & Statistics; Stock Markets; Interest Rates and Unicorns

April 2019, Q1 Report

A substantial portion of Q1 statistics reflect new listings and accepted offers occurring during the mid-winter market doldrums (Thanksgiving to mid-January). In November and December 2018, the stock market plunged drastically from its all-time high in September, and interest rates hit their highest point in years: these factors negatively affected buyer demand. Then both turned in dramatically positive directions in early 2019. So, Q1 statistics reflect economic conditions in both Q4 2018 (very negative) and Q1 2019 (very positive). It is also the quarter with the lowest sales volume.

The spring selling season - whose data starts to show up in March, but is mostly reflected in Q2 - is the most active of the year, and has often seen high rates of appreciation. As always, there are many economic factors at play impacting Bay Area markets, some of which are discussed below.

Year-over-Year & Long-Term Trends

Median Sales Price Trends by Month - Long-Term

Median Sales Prices by Quarter - Shorter-Term

Year-over-Year Quarterly Appreciation Rates

The high - and sometimes very, very high - rates of appreciation in recent years shifted to no year-over-year appreciation in Q4 2018 and a slight decline in Q1 2019. What occurs in the current quarter, Q2, will be critical to understanding market direction.

Selected Market Indicators

The following charts tracking supply and demand give greater context to the statistics in the table at the beginning of this report. Some of the drama in year-over-year comparisons is due to the fact that early 2018 was such an incredibly hot market - perhaps the most competitive since 2000.

Luxury Home Sales

Selected Economic Factors

Employment

A critical factor has been the staggering increase in employed Bay Area residents since 2010. Outward-bound migration trends of residents and businesses - often citing housing costs as one major motivator - have been an increasing concern in recent years, but for the time being, employment numbers have continued to grow.

Financial Markets

A wild ride in stock prices, particularly in high-tech: Prices soared to new peaks in summer-early autumn 2018, plunged drastically in Q4 2018, and then saw the biggest Q1 jump in 20 years. Huge amounts of wealth appearing, disappearing and reappearing - another major influence on consumer confidence and home-buyer demand.

A new surge of large, high-tech unicorn IPOs - mostly of firms headquartered in SF - has just started to roll out. IPOs have historically created vast quantities of new wealth in the Bay Area, though the magnitude of effect of this new wave on specific local housing markets is yet unknown (but currently fiercely disputed).

Interest Rates

There has been a stunning decline in mortgage interest rates from mid-November 2018 through the end of March, from 4.94% to 4.06% - to the enormous advantage to buyers. Big drops such as this have helped to recharge buyer demand in the past.

Housing Affordability & Household Incomes

This chart calculates the income required to buy a median-price house in Q4 2018. Median condo prices are substantially less in every county and would require lower incomes. San Mateo and San Francisco have been seesawing back and forth for the highest median house sales prices in California.

In the next chart county median household incomes are broken out for homeowners and tenants – some Bay Area county incomes are among the highest in the country. However, comparing the chart below to the chart above illustrates the disparity between prevailing incomes and the incomes required to purchase in the Bay Area.

Health & Economic Indicators

According to a 2018 ranking of state health conditions by the Commonwealth Fund, California ranks 14th in the nation (1st being best - Hawaii). According to CountyHealthRankings.org, Bay Area counties are at the top of the list within CA for Overall Health Outcomes: Marin, San Mateo and Santa Clara rank 1, 2 & 3 respectively. San Mateo ranks 1st in the state for positive social and economic factors.