The Powerful Forces Driving San Mateo County Home Prices to New Highs
I wanted to share some pretty fascinating things happening in the San Mateo County real estate market right now. We just set some new records, and if you're thinking about buying or selling in the near future, there's a lot you'll want to know.
Record-Breaking Q3 Numbers
San Mateo County just achieved its highest Q3 median home price ever – coming in at $1.93 million. What makes this even more interesting is that this is happening while mortgage rates are still hovering around 6.3%. The luxury market has really exploded, with the number of sales over $5 million up 39% compared to September 2024. That's pretty meaningful data that we haven't seen in quite a while.
San Mateo County now ranks number two in the number of Bay Area luxury sales, right behind Santa Clara County. This year we've had 209 sales in San Mateo County and 348 in Santa Clara County.
One fascinating contrast: while the luxury market is booming, the condo market is actually down about 8% from last year. Condo prices have basically remained flat over the last four to five years while home prices keep hitting records. So if you're thinking about buying a condo, make sure you're doing it for the right reasons. Townhomes have fared better and are up about 10%.
The AI Effect
You've probably been reading about AI's impact on the Bay Area, and I'm seeing it firsthand with my clients. The stock market is at an all-time high, creating quite a bit of wealth for anyone working in big tech sectors. The amount of wealth being created is unlike anything I've ever seen in the housing market including the white hot COVID market of 2020 to 2021.
Here's what's driving this: OpenAI recently allowed their employees to sell close to $10 billion in stock on the secondary market. Many of those employees are first-time buyers wanting to purchase homes in the $3m to $5m range, right here on the peninsula. I have represented clients working at companies like Oracle and Nvidia where stock values have gone through the roof. These are younger buyers with deeper pockets than we've typically seen, making the market incredibly competitive for the best real estate.
San Mateo County sits right in the sweet spot between San Francisco's AI startup boom and Silicon Valley's tech giants. With companies like Anthropic and OpenAI in the mix, we're seeing a lot of pressure, especially in the northern part of the peninsula.
We closed several listings in the last few weeks, and all of them sold at numbers that were beyond what we had been forecasting before the homes came on the market. Now we did price them appropriately, prepare the heck out of them, and the market saw value at very high numbers, but these all landed or will land at record numbers.
What the Numbers Tell Us
Some interesting demographic data: 36% of people living in San Mateo County are foreign-born and highly educated, with about 24.9% holding graduate or professional degrees. The median household incomes are impressive – Atherton leads at $620,000, Hillsborough at $523,000, and Portola Valley at $482,000. Even areas like Burlingame ($237,000) and Redwood City ($224,000) show strong numbers.
Right now, 48% of properties are still selling over the asking price. That's down from about 58% last year, but it's still very strong. The median price per square foot in San Mateo County is $1,152, which is even higher than Santa Clara County's $1,128.
Supply Remains Tight
The supply situation is a big part of this story. 2023 had the fewest number of sales in San Mateo County in the last 25 years, and 2024 was the second fewest (our data from MLS unfortunately doesn’t go back more than 25 years). We're tracking slightly above last year right now, but still historically low. So if you’re a buyer and you’re feeling, jeez, where’s all the homes for sale in the areas I want to be, it’s not just you - that’s kind of how it is, and has been, the last three years. As of now, there are 882 homes for sale in San Mateo County.
We did see almost a 10% increase in new listings since September, which is good news for buyers, and common for this time of the year to see a bump after the summer. But the reality is that buyers have deeper pockets now than they've had in the past few years, thanks to all the liquidity from tech companies.
What I'm Predicting
Based on what I'm experiencing right now in Q4 2025, I think we're going to continue seeing significant appreciation happen in the next three to nine months. This won't be across the board, it'll be for the best properties with the best locations, conditions, and floor plans.
The Fed did cut rates by a quarter percent in September, which was the first cut all year. We could see more cuts before the end of the year. Inflation is at about 2.9%, up from 2.4% at the beginning of the year, but we're seeing appreciation significantly more than that.
If You're Thinking About Buying
Expect very strong competition in the two to six million dollar range. About 30% of transactions in higher-end markets like Burlingame and Hillsborough are cash. I've written offers in the last month ranging from $1.5 million to $6 million that were all cash. People have been sitting on savings and are now deploying that capital. I sold one home in Hillsborough for a little under $6m and we thought we’d be the only offer at a price well under asking especially at a couple weeks on the market, but then another buyer came in to make it competitive and our client paid over asking.
If you're getting a loan (which most people are), make sure you go beyond just being pre-approved. You'll want conditional underwriting approval to compete effectively, especially against cash buyers. The best homes are typically only on the market for seven to ten days, so you need to move fast when you see something compelling.
Be prepared to overbid at all price points – anywhere from $100,000 to $500,000 or more over asking, depending on the price point and how underpriced the property is.
If You're Thinking About Selling
The timing right now is better than it's been at any point in the last 24 months. I think the winter and spring are going to be equally strong, if not stronger. Make sure you have an attractive asking price and that your home is properly prepared so it looks its best visually with no major condition issues for buyers.
If you're buying and selling at the same time, there's a lot you can do to prepare your home way before you list. This helps you avoid owning two homes at the same time, which gives a lot of people anxiety especially in earthquake country (I remember 1989!). You can get inspections done, handle the marketing prep, and save yourself four to eight weeks of time owning two properties on the back end by starting sooner.
The Bottom Line
The AI boom is showing no signs of slowing down. Every time I read the San Francisco Business Times or Wall Street Journal, there's another story about a Bay Area company closing a major deal. Yes, there's probably some froth in the marketplace, but a lot of this is real. And regardless, it's creating downstream wealth for employees at these companies, which directly affects our real estate market.
A city like Burlingame has about 6,200 homes total and saw 170 sales last year – that's maybe 10-15 sales per month. It only takes two or three new buyers from companies like OpenAI who weren't in the market 12 months ago to push prices up. Multiply that across companies like Oracle, Apple, and Google and a ton of other smaller local companies, and you can see why we're in this position.
So if you're thinking about making a move in the next few months or later next year, I'd love to chat with you about your specific situation.
This article is copyrighted by Raziel Ungar and may not be reproduced or copied without express written permission.
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