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.
