What's going on in our wonderful peninsula real estate market?

Hi everyone!

We've had quite a bit of adventure in the peninsula real estate market. I've included a few charts below so you can focus on whatever suits your fancy, however, what we are finally seeing is not only a leveling off but a softening in pricing for all but the most prime pieces of real estate.

The summary: interest rates are up significantly, prices have generally moved down back to 2021 numbers (which is not catastrophic at all) and days on market are up. While the number of sales (sales volume) is way down from 2021, it is not down from the trend over the last few years (2018, 2019, and 2020) - last year was just different.

Despite global headlines, the good news is, the Bay Area market has not dropped off a cliff. We are in a period of transition on the peninsula. So unless you bought earlier this year, and are selling at the end of this year, your investment will likely be fine. If you're a buyer, you now have a great selection of homes to choose from and likely more leverage in a negotiation than you've had in recent memory. If you're a seller, your home will need to be priced attractively so buyers feel the asking price is fair, or else it may sit.

Interestingly, while I rarely discuss San Francisco real estate in my blogs, it is worth mentioning that San Francisco condo market has taken the biggest hit, with the median price of a condo now a tad below 2017 pricing. One colleague told me about a listing he has in contract in a building in SF that is a similar price to a comparable unit sold eight years ago.

Now to the data...

For the charts below, we have added in what I would consider four of the most salient data points for tracking data - number of new listings, number of sales, and average and median sales prices, compared YTD 2022 to YTD 2021, so we can compare apples to apples for time periods. This data is current through the end of September. Q1 and the first part of Q2 were blazing hot, with little inventory and significantly increasing price points.

In the chart above, notice that the median sales price county-wide dropped the most in July (10% that month). At the end of September 2022, median prices are down 6% from the month of September 2021, and we are still up 5% compared to the end of last year. You would think that prices would drop further with interest rates increasing, however, inventory is still down from a year ago so there's less for buyers to choose from. However, for the buyers in the marketplace, many are much more selective than in the past, and it's much more common for homes to sell without multiple offers than what we saw a few months ago.

Burlingame in particular saw some crazy data in the beginning of this year, with so few homes for sale as well as record sales prices. Then starting in July, inventory jumped significantly to increase 43% from what we saw in July 2021. However YTD, we've seen roughly a similar amount of new listings but a significant decrease in the overall number of sales from last year which looks concerning on the surface, but once we look at the data, we're actually trending normally. For example, we've had 139 sales through the end of September 2022, vs 203 in the similar time period in 2021. However in 2019 we had 142 sales, and in 2020, we had 136 sales, so in fact we are trending similarly as in past years. And on a positive note, we can see that median pricing this year is STILL 9% over the same period a year ago, though the last two months we've seen a downward trend on pricing of 9% in the median price in August compared to August 2021 and a 8% decrease in September compared to September 2022.

San Carlos has had a strong year as well, with low inventory to start, fewer sales this year compared to last year though not far off from previous years. The median-priced home is still 13% higher than last year, though we can see that the last few months the median-priced home has been lower than the similar corresponding month last year.

Hillsborough can be a tougher market to track on a monthly basis given that the town averages no more than 10 to 15 sales per month, and some sales could be millions of dollars higher or lower than other sales. However, when we look at the data, we can see that pricing is a tad above last year still, though the median priced home has dropped double digits after double digit gains earlier this year.

Belmont had the hottest Q1 this year of any town that I closely track with March's median price 33% higher than March of last year! That month there were several huge sales in the Hallmark neighborhood;, one of them I represented the buyers in the low $4m range. Belmont is also the only town that has not recorded a drop in average or median sales prices on a monthly basis this year.

Millbrae has tracked roughly similarly with Burlingame this year. Fewer new listings and sales, though in line with historic numbers. Higher pricing now compared to last year.

Redwood City despite having similar Q1 inventory as last year - whereas other towns had meaningful drops - still had double digit increases in pricing, and even in August and September of this year still recorded notable pricing increases as other towns experienced decreases in pricing. It's fair to say Redwood City, like Belmont, has held it's value well.

San Mateo began the year with some massive price appreciation as well, with median pricing up 31% in April compared to April 2021. Given San Mateo is the largest town on the north peninsula with the widest array of home pricing ($1m to $8m), despite it having a large number of sales, depending on the mix of sales per month it can be hard to distill. For example, in July, August, and September, we saw the median price decrease twice and increase once.