San Mateo Real Estate Q2 Report - Compass

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.

San Mateo County Real Estate

Entering the Spring Selling Season

March 2019 Report

Spring 2018 was one of the hottest markets in San Mateo County and around the Bay Area over the last 2 decades. The market began to cool in summer and autumn - demand, sales and appreciation rates generally dropping, while supply and price reductions increased. Then the mid-winter doldrums took hold. The magnitude of these changes varied by region, and San Mateo was less affected than many other local counties - but it was still affected.

Since the recovery began in 2012, spring has typically been the most active season of the year, and often the period during which appreciation gains have been the largest. The spring 2019 market is just getting started amid a diverse set of economic indicators. Financial markets have, so far, recovered in 2019, interest rates have dropped, and big local IPOs loom. We will know much more soon.

Long-Term, Annual Trends in Median Home

Price Appreciation

Short-Term, Monthly Median Price Changes

The February median house sales price was well down on a year-over-year basis, but February is one of the lowest sales-volume months of the year. Looking at first and second quarter price data will be a much more meaningful indicator of home price trends, as we compare spring 2019 to spring 2018 (which saw a dramatic spike in median home prices).

Median House Price Appreciation

by City, 1998 - 2018

Markets appreciate due to a wide variety of local and macro-economic reasons: economic cycles, industry booms, inflation, consumer confidence, interest rates, employment, gentrification, new construction, comparative affordability (to other nearby markets), population growth, buyers’ median age, proximity to major company HQs, commuting, fashion, and so forth. The combination of factors affecting any particular area is often specific to that market.

Around the Bay Area, more expensive homes have generally appreciated less than more affordable homes, especially over the last 3-4 years, but the picture in Silicon Valley is more complicated. For example, in San Mateo, Atherton has the second highest 20-year appreciation rate, and it is the most expensive city in the Bay Area. The city with the highest rate is East Palo Alto, the most affordable city in the county. (In Santa Clara County, Palo Alto came in first.) These percentages should be considered very approximate.

For more context on the appreciation percentages above, below is a chart from last month's report delineating 2018 median sales prices.

Inventory Levels in January-February

Year-over-Year Comparisons

January-February inventory was well up from the abnormally low levels seen during the same months of recent years, but was not particularly high from a historical perspective.

Active Listings on Market

as of March 1, 2019

The number of active listings fluctuates daily, and the numbers below are rapidly increasing as more new listings come on market. These next 2 charts are snapshots of active listings on March 1st.

Listings on Market

by Price Segment, 3/1/19

Active Listings by City

& Median LIST Prices, 3/1/19

The supply of listings available to purchase varies widely between cities, which can be a simple reflection of market size and/or an indicator of supply and demand dynamics. If median LIST prices (below) are well above median SALES prices (charted earlier in this report), it is typically a sign that the balance in listings for sale is disproportionately weighted towards higher priced properties, which take longer to sell - and/or a sign of systemic overpricing beyond what buyers consider fair market value.

As of March 1st, Atherton had a median house list price of $11 million for its 18 active MLS listings - far and away the highest median asking price in the Bay Area.

Market Seasonality

New Listings Coming on Market

by Month

New inventory usually starts pouring into the market right now, in early spring, to fuel the biggest selling season of the year. It also spikes dramatically in September for the shorter autumn season.

Home Sales Volume

by Month

So far in 2019, monthly sales volumes are very comparable to the beginning of 2018, however these are typically the lowest sales-volume months of the year. March is usually the month in which the big spike in spring sales starts to show up, following the jump in new listings.

Listings Priced $3 Million+

Accepting Offers, by Month

If anything, the luxury home market in Silicon Valley is even more fiercely seasonal than the general market.

Market Statistics by City

Many of the cities ranked at the top of the market-heat scale - as measured by 2 standard statistics below (for the second half of 2018) - are among the most affordable. But there are certainly other factors, as mentioned in the paragraph on appreciation rates.

Sales Price to Original List Price %

by City

Any percentages over 100% reflect overbidding of asking prices. Though these percentages have been declining since mid-2018, many of them are still very high compared to other markets.

Average Days on Market

by City

Many of these days-on-market figures are among the lowest in the Bay Area. Note that it is not unusual for more expensive homes to take longer to sell, though, again, that is not always the case.

Comparing Bay Area County Markets

Listings for Sale by Price Segment

Median Home Prices, Q4 2018

San Mateo and San Francisco Counties have been alternating by quarter for the title of having the highest median house sales price in the Bay Area.

Active Listings Priced under $1 Million

by County

Luxury Home Listings by County

Santa Clara County has the largest market in the state for homes priced $3 million and above, but San Mateo County has more listings priced at $10 million+.

County to County Migration

Coming to & Leaving San Mateo

People move to San Mateo County from all over the country and the world, and people leave to move to a vast number of locations, for differing reasons. This analysis looks at those counties with the greatest number of people moving to and from San Mateo. In many cases, there is a large exchange between 2 counties, with residents going in both directions. Often, but not always, the outward flow is greater to counties with more affordable home prices, but there are many factors - such as schools, employment, commuting and other quality of life issues - at play.

Demographics Snapshot

Educational Attainment

Silicon Valley vs. U.S.

Unsurprisingly, Silicon Valley is one of the most educated places on the planet.

Education & Income

Disparities between the Sexes

An indicator of the income-generating value of education, along with an unhappy indicator of where progress remains to be made in income equality. (As an aside, real estate is certainly one of the first professions that saw income equality established between the sexes: Women have been holding their own and, indeed, often dominating rankings of top Bay Area agents for many decades.)

The statistics in this report are very general and approximate indicators based upon listing and sales data pertaining to assortments, of varying size, of relatively unique homes across a broad spectrum of locations and qualities. How these statistics apply to the current value, appreciation trend, and prevailing market conditions of any particular property is unknown without a specific comparative market analysis.

San Mateo County Real Estate

Looking Back on 2018

Compass January 2019 Report

There were almost too many political, economic, social and even ecological factors impacting the 2018 market in the Bay Area to count. At the end of 2017 and in the first half of 2018, market conditions were about as hot as they've ever been, and there were staggering year-over-year appreciation rates. Come summer/early autumn, real estate and financial markets began to shift distinctly cooler.

There are a lot of spinning plates right now - locally, nationally and internationally - with the potential for both positive and negative impacts on local housing markets: volatile financial markets, fluctuating interest rates, contentious national politics, international trade issues, migration trends, spiraling debt levels, employment growth - and a surge of local high-tech unicorns that plan to go public, which could create a tsunami of new wealth in the Bay Area. All this should make for another interesting year.

Annual Median Sales Price Trends

On an annual basis, the 2018 median house sales price rose 6.2% or $90,000 from 2017 to $1,540,000.

Quarterly Median Sales Price Appreciation

These next two charts illustrate how year-over-year appreciation by quarter soared at the end of 2017 and the first 2 quarters of 2018, but then started to drop. By Q4 2018, the y-o-y appreciation rate had dropped to zero as compared to a whopping 21% jump in Q1. This dynamic was broadly similar across almost all the Bay Area markets.

Home Sales & Prices

Selected Market Indicators

Many of the market indicators below reflect the huge role seasonality plays in the market, whether measuring inventory or demand. Conditions have definitely cooled since the height of the spring selling season, as is not uncommon, but many of these statistics do not yet show dramatic changes from recent historical trends. However, price reductions and expired, no-sale listings have increased to multi-year highs, and the sales price to original list price percentage has dropped - clear indications of some softening in the market. December and January are the two lowest-activity months of the year, and we will probably have to wait until the early spring market begins for more insight into where the market is heading.

These next 3 charts illustrate the distinct cooling that has taken place since the feverish, buyer competition for listings (and over-bidding) that prevailed this past spring.

Luxury Home Market

Silicon Valley has the biggest luxury home market in the state.

Selected Economic Indicators

Employment growth - in many cases of very well paid jobs - has continued in Silicon Valley, San Francisco and around the Bay Area. This, of course, is a huge factor in housing markets.

Migration: On a domestic basis, more people are leaving the Bay Area to go to other metro areas in the country than are arriving from other metro areas, and housing affordability and tax issues are widely cited as big reasons. However, foreign immigration tips the scale, for the time being, to continued, if slowing, population growth. The latest census data does not yet reflect changes that may have occurred since the anti-immigration position of the Trump administration has come into play. (About 35% of Bay Area residents were born in a foreign country.)

After climbing significantly through November, interest rates have been dropping since then, through the first week of January - good news for buyers and sellers. However, rates are still much higher than the lows seen in the last few years, and predicting what will happen in the near future is very difficult indeed.

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