Q2 will probably be the hottest market we’ve seen since the peak of the pandemic boom

Looking back at the first quarter, if I had to describe the real estate market here in San Mateo County, I’d use two words: surprisingly hot. 

Why is the market so hot right now?

Low Inventory and Slightly Lower Interest Rates

Last year with rates staying around the same level, after a huge jump in 2022, some of you may have felt like it didn’t make sense to make a move. In the last few months, we’ve seen rates drop by about a point. Not earth-shattering or crazy amazing, but hey, we’ll take it. Last year, inventory was at a 22-year record low, so lower demand didn’t lead to lower prices. Now, I’m seeing many people I chatted with in the last couple of years who have been waiting patiently, saying, “I might as well just do it”!

Consumer Confidence Highest In Three Years

A major reason the real estate market is as hot as it is is the stock market. It’s at an all-time high. People are feeling a lot more confident about buying a home even in this environment of higher rates. You’d probably agree with me that most purchases around here are discretionary - no one “needs” to buy a $3, $4 or $5m house. 

But if you live and work here, have kids in school, and you’re blessed with the opportunity to buy your first home, or move up to a larger home, you’re probably going to feel pretty good about buying a home right now. If you work at a company where you have RSUs, there’s a good chance they have become a lot more valuable than at any point in the last two years. This puts many people in a position where they have the healthy down payment needed to buy. 

Nearly all the transactions I’ve done this year have been very competitive with a minimum of 3 to 5 offers on each. I wrote one offer a month ago where there were over 30 offers on a home in San Mateo. It sold for a record price. My clients didn’t get the house - they ended up buying in San Carlos - and we were happy there were just three offers, and even that home sold for a premium price. 

Market Data

Some highlights from the March data.

• 60% of homes in the Bay Area had multiple offers and sold over asking. 

• The average home sold 4% over asking, which was the highest average since March 2022. 

• While we had almost 7% more new listings year over year, the number of pending sales was up 36% vs last year.

• For context, the 7% more new listings now vs a year ago is still 30% fewer new listings than we saw in March 2022 when the market was humming along.

Considerations For Buyers And Sellers

If you’re thinking about jumping into the market now as a buyer, my thoughts would be: 

• Take your time to get  familiar with where you want to buy casting a small geographic net of where you want to live

• Be patient because there’s still not a lot out there for sale

• Look closely at the data and market conditions for what you want

• Be prepared to write a very strong offer to compete 

In this market, for a hot property that other people want, you need to have the highest price to win the home.

If you’re thinking about selling, I like this time of the year because: 

• You’ve been able to benefit from some very strong closed sales so you have a good idea about the value of your home 

• You also have the most number of buyers in the market at any time of the year

And for some fascinating population data, we can see a slight drop in population every year since 2017. Not surprising given how expensive it is to live around here.

Have questions? If you're thinking about making a move, I'd love the opportunity to connect with you.

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