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Spring typically marks the busiest residential market season of the year. Despite higher mortgage rates and the chronic problem of insufficient housing inventory, sales activity has been ramping up since the cold, rainy weeks of late winter, kicking off what could be a fairly brisk spring.
Realtor Jasmine Lee finds optimism growing out of a busy February.
“It was a very busy month, and the demand for housing in our area is especially high,” said Lee, an agent in the Menlo Park office of Coldwell Banker Realty.
Homes in all price categories, from entry-level to luxury, saw strong demand, Lee said. She added that multiple offers on properties are common this year.
Dave Walsh, broker manager of the Compass Los Altos and San Jose offices and past president of the California Association of Realtors, who has been tracking market stats in Silicon Valley over two-week periods and comparing them to the previous month, said high-end homes are getting buyers’ attention. Walsh noted there were a reported 21 multiple offers on a $5 million property earlier this year, according to data he provided to the Silicon Valley Association of Realtors.
Walsh’s research indicated less than 1% of sales that are pending have contingencies. This is reflective of the pressure on the housing market, he said.
The number of homes selling above list price also has been trending upward. According to Walsh, Sunnyvale, Cupertino and Mountain View are cities that are “hot” in Santa Clara County. Homes in these cities have sold as much as 20% over their asking price.
Condos and town houses
The market for condominiums and town houses — hard hit during the pandemic — also appears to be bouncing back. The segment recorded a 23% growth in sales in San Mateo County during February as compared to January, according to data from the San Mateo County Association of Realtors. The median sales price in this category was $949,000.
The average number of days condos and town houses stayed on the market during the first two months of the year dropped dramatically from 61 to 38 days. .
In Santa Clara County, town houses made up nearly 36% of available listings at the end of February. According to Walsh’s data, of the 1,034 properties on the market, 368 were town houses. The median price in this category was $867,623 in February, according to Zillow.
Single-family homes
Sales of single-family homes also increased in both counties during the late winter.
In San Mateo County, which recorded a median sales price of nearly $1.9 million, sales were up by a modest 2% in February.as compared to January.
The average number of days a single-family home stayed on the market dropped from 19 in January to 10 in February, according to the data.
A move does not necessarily generate a sale anymore.
Denise Welsh, Christie’s International Real Estate, Sereno
In Santa Clara County , February sales increased 25.9%. The median sales price rose to $1.8 million, a 5.8% jump compared to January, the Silicon Valley Association of Realtors reported.
The number of new listings in Santa Clara County jumped 34% during the same period. The median number of days homes stayed on the market dropped to eight, according to MLSListings.
Lee said ongoing low-inventory levels in both San Mateo and Santa Clara counties are pushing up prices and forcing out less-affluent buyers to the East Bay, the outskirts of Santa Clara County and beyond.
There were only a few hundred available homes and a few hundred condominiums on the market in both counties in February and March, she said.
Several properties, Lee said, have sold well-over the asking price – a few have sold for as high as 30% over.
“No question, this is a seller’s market,” said Jim Hamilton, immediate past president of the Silicon Valley Association of Realtors and a Los Gatos-based agent for Compass real estate with listings throughout the Midpeninsula and South Bay.
Interest rates, inventory – and the presidential election
Hamilton said high-interest rates, which averaged 6.79% for a 30-year fixed-rate mortgage on March 28, have been among the biggest reasons for the Midpeninsula’s paltry inventory in 2024. The comparatively high interest rates of today give little incentive to sell for existing homeowners who bought their dwellings at half the interest rate, he said.
“We don’t have much inventory, and there’s not much coming,” Hamilton said. “No one wants to give up their low-interest rate, even longtime homeowners who are more than ready to downsize,” he said.
“The financial incentives are often just not very attractive for homeowners,” Hamilton said. “Demand is very high in this market, though.”
“We don’t have much inventory, and there’s not much coming. No one wants to give up their low-interest rate, even longtime homeowners.
Jim Hamilton, immediate past president of the Silicon Valley Association of Realtors
Elyse Barca, agent in the Menlo Park office of Compass agreed. There’s a lot of pent-up demand after a very quiet fall market, she said.
Prospective buyers have gotten over their high-interest rate sticker shock of 2023 when interest rates were pushing 7%, Barca said.
In a market with both historically low inventory and no incentives to sell, Barca attributes the increased listings activity to the five Ds — death, divorce, diapers, diplomas and downsizing.
“These are factors that are constant in people’s lives that can motivate a lot of sales activity,” she said.
There are also presidential elections, which for some reason tend to create busy markets, she said, adding that 2024 shows no sign of deviating from that pattern.
Sounding more of a note of caution for the spring market is Denise Welsh, a Los Altos-based agent for Christie’s International Real Estate, Sereno.
Though cautiously optimistic, Welsh said the upcoming U.S. presidential election between incumbent Joe Biden and former President Donald Trump has a lot of people on edge about the future.
Welsh doesn’t necessarily connect elections with brisk home sales activity — at least not this year.
“There’s lots of apprehension out there from a political perspective,” Welsh said. “But we have to remain optimistic.”.
Welsh predicts this will contribute to a more “normal” market on the Midpeninsula and Silicon Valley during spring and the remainder of the year – meaning it will be reasonably active but not frenetically so.
A new pool of buyers
As part of Silicon Valley, many buyers on the Midpeninsula still come from the tech industry, despite significant layoffs in the last few years. Barca said she increasingly sees professionals from the health care industry and the educational field — most notably from Stanford University, where some academic staff receive financial assistance for housing from the university.
Based on brisk buying activity during the first two months of the year by many techies, doctors and professors, Barca predicts a spring resurgence in the market after a dormant fall season.
Like Barca, Welsh said she sees a growing number of buyers from the health care, education and research fields.
“That is a growing and sizable subgroup in this area,” Welsh said.
Investment buyers are still in the mix, too, looking to profit from the Midpeninsula’s highly lucrative real estate.
“The flippers are out there,” Welsh said.
Another trend Welsh foresees for the year ahead is more older homeowners in Los Altos, Palo Alto, Menlo Park or Woodside deciding to finally move into a retirement property — but not necessarily selling their homes in the process.
“A move does not necessarily generate a sale anymore,” she said. “If longtime homeowners are able to retire and move, then rent their existing home out at a profit, it becomes attractive to not sell. Many seniors do not want to pay the capital gains taxes.”
David Goll is a contributing writer who covers Peninsula real estate for Embarcadero Media.