Summer is here and with it comes some good news for both home buyers and sellers. Median home prices across most cities were still up year-over-year, but they either held steady or dropped slightly from last quarter. This could be due to the welcomed increase in inventory and the slight market softening we typically see in the summer.
The second quarter was still, however, a sellers’ market as most homes sold for well over their listing price with an average time on the market of 16 days or less.
Median Home Prices
In the second quarter of 2018, median single family home prices continued to rise slightly in both San Mateo and Santa Clara counties. The median home price in San Mateo was $1.65 million, representing a 12% increase, year-over-year, from 2Q17, and a 5% increase from last quarter. Santa Clara saw a 16% year-over-year (2% quarter-over-quarter) gain with a median home price of $1.37 million.
Cupertino and San Carlos were the standout cities this quarter as these were the only areas to experience an increase in their median sales price over last quarter. In Cupertino, that meant a median sales price of $2.48 million, which was a 3% increase over 1Q18 and a 16% increase from 2Q17. San Carlos saw a much bigger jump in its 2Q18 median sales price of $2.15 million, which was a 13% increase from 1Q17 and an 18% increase year-over-year.
While the rest of the Peninsula didn’t see a median price increase from last quarter, the homes in these areas were still worth more at the end of 2Q18 than they were at the end of 2Q17. Most notable were the cities of Menlo Park, Woodside and Atherton. In Menlo Park and Woodside, the median home price in 2Q18 was $2.75 million, representing a 20% and a 35% increase year-over-year, respectively. In Atherton, the median home price increased 30% year-over-year to $6.65 million.
Homes are also continuing to sell at well-above list price. In Mountain View, the percent of sale price to list was 114%. In Menlo Park, it was 110%. In fact, at 98.7%, Woodside was the only submarket to have a percent of sale price to list below 101%.
But when will prices hit their peak? That’s a question I can’t answer for certain. I can tell you the local economy continues to boom, technology companies continue to expand their presence in Silicon Valley and add well-paying jobs at a rapid pace, and we don’t anticipate a significant increase in the housing inventory anytime soon, so it appears we’ll be on this climb for a while longer.
Despite an increase in home prices, homebuyers received some welcomed news this quarter as both Santa Clara and San Mateo Counties added more housing inventory than we’ve seen in quite some time. In the second quarter, Santa Clara increased its inventory by 31.4% and San Mateo by 29%.
All major cities except for Atherton and Redwood City increased their listing supply by double digits, thus lessening some of the pent-up demand and competition for available properties. Palo Alto saw a 22% increase in supply, Menlo Park an almost 30% increase and Los Altos Hills a 24% increase. Sunnyvale added the most listings by number at 78 and the greatest increase, by percent, was in Portola Valley, which added 11 listings in the second quarter, a 64% increase over 1Q18.
That being said, we still had roughly one-month’s supply of inventory throughout the second quarter. That means, given current buyer demand, it would take one month to sell every home that’s currently for sale, provided no new inventory gets added to the market. This is about the same level of inventory we had this time last year, but historically, these numbers are very low.
Average Days on the Market (DOM)
As inventory is added to the market, logic would tell you that homes would take longer to sell, but in 2Q18 that only happened in certain areas. The average days on the market for homes in San Mateo and Santa Clara counties were 17 and 14, which means they sold on average 2 days quicker than they did in last quarter.
In fact, in every submarket except Woodside, Los Altos Hills and Atherton, homes sold in an average of 16 days or less. In 2Q18, the average home took 60 days to sell in Woodside, 47 days to sell in Atherton and 43 days to sell in Los Altos Hills. Compare that to 10 days in Mountain View, 11 days in Sunnyvale, and 15 days in Menlo Park. It appears, despite the increase in inventory, there is still plenty of pent-up demand.
What This Means for Buyers and Sellers
We are still in a seller’s market but more competition means property preparation, marketing and pricing strategy are more important than ever. If you’re thinking about selling, you’ll need an agent who has deep knowledge of the local market as well as a wide personal and professional network.
As a buyer, information and expertise will be the key to your success. You want to partner with a real estate agent who has deep roots in the community and knows how best to position you to be successful.
A market as dynamic and competitive as Silicon Valley requires a real estate agent who understands the nuances of each city and is also a fierce negotiator who can best position you to get the home you want.