San Mateo Real Estate: Crisis Update

The first thing to remember is that there is a time lag - usually 3 to 6+ weeks - between a new listing coming on market, an offer being negotiated and accepted, and when the transaction actually closes sale. This means that almost all of the sales price data we have, as of the first week of April, still reflects the market BEFORE the shelter-in-place rules went into effect. In virtually all Bay Area counties, March median sales prices were quite strong. 

These first 3 charts review median sales price trends in the short, medium and long-term. March and first quarter prices generally reflect the pre-crisis market. 

The following 4 charts detail the plunge in listing and accepted-offer activity, and the surge in listings being pulled off the market by sellers, over the past 4 weeks. Typically, at this time of year, the first 3 charts would be seeing steady climbs over February numbers, and the 4th chart would have a very low, flat trend line. Though the numbers are way down, some listings have still been going into contract.

Those listings that did go into contract in March - a much lower number than normal - apparently did so quite quickly after coming on market, presumably seizing the attention of buyers despite the crisis. Or the buyers and sellers may already have been in the midst of negotiations when shelter in place rules began.

The luxury market is fiercely seasonal, and typically spring (Q2) sees the peak in annual sales volumes. Higher-price home sales are often more deeply affected by financial-market crises since affluent households tend to have more wealth tied up in the markets, and watch their movements more closely. 

Weekly changes in the luxury and ultra-luxury home markets. 

There is a lot going on in the world right now and we won’t pretend to know how things will turn out or affect the local real estate market over the next few months. In the meantime, this report will look at the most recent data available, though the impact of the wild volatility in the financial markets and the unfolding situation with the coronavirus has yet to show up in reliable statistics. Typically, the spring selling season is the most active of the year. 

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. 

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.

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. 

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

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. 

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.

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

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.

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. 

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.

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.

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.

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 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.

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.

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

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.

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

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. 

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. 

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.