The weather is changing and so does our residential real estate market in Silicon Valley. Historically, May and June typically show increasing single-family home sales, but beginning last year, the market began to dip slightly. Across many Silicon Valley cities, slightly lower single-family home prices and attractive interest rates may give current home-buyers an opportunity that hasn’t been seen in the Bay Area in quite some time.
Most cities still saw an increase in median home prices in 2Q19, with single-family homes selling above list price, and less inventory was added to the market than last year. Single-family homes are also taking longer to sell vs. last year, though still relatively fast compared to other markets outside of Silicon Valley.
Median Sale Prices
In the second quarter of 2019, median single-family home prices in Santa Clara and San Mateo Counties rose from Q1, though Santa Clara County home sale prices saw a dip from this time last year. The median home price in Santa Clara County was $1.3 million, representing a 7.9% increase from last quarter, and a 7.5% decrease year-over-year. San Mateo County saw a 32% increase since last quarter and a 21% increase compared to last year with a median home sale price of $2 million.
Atherton and Palo Alto were the only cities to see significant increases in median sales prices from last quarter. Only a small number of single-family homes sell in Atherton each year so even a few sales can make a significant change in the data. That being said, Atherton had a median sale price of $8 million for 2Q19 which is a 20% increase year-over-year and a 47% increase from 1Q19. Though Palo Alto only had a 6% median home sale price increase year-over-year, the city saw a 60% increase from last quarter with a 2Q19 median home sale price of $3.5 million.
San Carlos, Portola Valley, Woodside, Cupertino and San Carlos all saw increases in median home sale prices between 1% and 9.4% since 1Q19. Menlo Park, Sunnyvale, Mountain View and Los Altos all saw decreases in median sale prices compared to 1Q19 with Mountain View at the lowest decrease of 22% less than last quarter. Since last year, however, Atherton, Portola Valley, Palo Alto and Woodside are the only cities whose median sale prices have increased with Woodside being the standout at a 26% increase year-over-year and a median home price of $3.5 million for 2Q19.
Overall, Silicon Valley homes continue to sell above list price, though not as significantly as this time last year. In 2Q18, most houses were selling for at least 110% of their list price. This year, most homes sold for 103% of their list price with San Carlos leading the way at 108% for 2Q19 compared to this time last year when Sunnyvale had the highest list to sale price ratio with an average of 115%. Portola Valley (97.9%), Woodside (98.4%) and Atherton (98.2%) were the only cities to come in under 101% this quarter. By county, San Mateo ended this quarter with homes selling at an average of 103.3% and Santa Clara at 102.2%, which indicates that we are still in a strong and healthy market with multiple offers and homes selling for above list price.
Price per square foot was up since last quarter but down in most cities year-over-year. The average price-per-square-foot for single-family homes in San Mateo county increased by 15.7% year-over-year from 2Q18 to $1192 per square foot. However, Santa Clara County experienced a 23% decrease since 2Q18 with sale prices at $884 per square foot.
In 2Q19, buyers in Palo Alto paid, on average, $1,755 per square foot, which was more than buyers in any other area but represented a 6% decrease from the average price per square foot in Palo Alto in 2Q18. Atherton was the only city to see a significant rise in price per square foot, at $1,707, a 16.8% increase year-over-year.
Silicon Valley housing inventory has been steadily rising since 2018, but for the first time we saw a drop since 1Q19 and 2018. In the second quarter, Santa Clara county’s inventory decreased by 35% and San Mateo by 64% year-over-year.
There are still cities in which inventory continues to rise, however, including Redwood City which saw the most dramatic increase in the number of new listings this quarter with 226, representing a 34% increase year-over-year. Los Altos was close behind with 137 new listings and a 30% increase in inventory since 2Q18. Portola Valley had the most significant dip with only 28 new listings; a 28% decrease year-over-year.
In 2Q19, Silicon Valley had roughly one-and-a-half-month’s supply of inventory throughout the second quarter. That means, given current buyer demand, it would take six weeks to sell every home that’s currently for sale, provided no new inventory is added to the market.
Average Days on Market (DOM)
As might be expected from other market trends this quarter, sellers in Silicon Valley experienced an increase in average days on the market year-over-year, though, generally speaking, homes were selling faster than last quarter. The average days on the market for San Mateo and Santa Clara counties were 24 and 21 respectively; a 41% and 50% increase year-over-year.
Portola Valley saw the most significant drop with an average of 31 days on the market representing a 66% decrease from last quarter. Atherton had the most dramatic increase with an average of 61 days on the market, 56% longer than in 1Q19, but once again, the few sales that occur in Atherton tend to skew data strongly.
What this Means for Buyers and Sellers
Though we are still in a healthy, strong market with pent-up buyer demand, the Q2 market stats point to a more neutral terrain and balanced climate for the time being. We are still seeing multiple offers for homes that are priced, prepared and positioned well to sell. However, lower mortgage rates and persisting low inventory have the possibility to create an exceedingly competitive market across the board once again.
A market as dynamic and competitive as Silicon Valley requires a real estate agent who understands the nuances of each submarket and is also a fierce negotiator who can best position you to get the home you want. So if you’re thinking of making a move, let’s talk.
*All data referenced above is provided by MLS listings.