June 2023 San Mateo County Market Update
It’s not all negatives!
Despite the last two months of the average selling price pulling back from months prior, our market is looking stronger than ever. Inventory is still low for this time of year, and buyer demand is strong. This is reflected in how quickly most properties are selling, and county-wide the average offer is 104% of the asking price.
While average sales prices appear to be in a downward trend for May 2023, this is really a false negative. Sales prices are lower compared to this time last year, but there are two big reasons for that – 2021 and 2022. Driven by a combination of post-COVID economic recovery, historically low interest rates, and insatiable demand from buyers, sale prices in 2021 and 2022 were abnormally high.
In the chart above, you’re seeing the averages sale prices for single-family homes sales in San Mateo County for May 2012 thru May 2023. You’ll notice 2021 and 2022 are two years that are outliers from the overall trend. With this macro view, you can see that May 2023 falls right in line with the typical trend, and prices are continuing to steadily appreciate, just lower than they have in the two years prior.
Another critical indicator of market health and strength is how quickly inventory is being absorbed. In the chart above, you can see that inventory has been steadily rising since January, and the number of sales in May 2023 was comparable to summer/fall 2022 when interest rates were still historically low, slowing down in October as interest rates began to increase.
In this graph you can see how quickly the new inventory was snapped up by buyers, with days on market lowering even as more inventory became available. With the increase in inventory and buyer activity, so returned multiple offers, pushing the sale price to list price ratio (or overbids) up. This is currently floating around 104%.
With only 1.5 months of inventory available, we are still in a strong seller’s market, and demand from buyers remains high.
The Big Picture
The San Francisco Bay Area Housing Market is one of the strongest and most resilient in the country. While higher interest rates have certainly cooled the market, values have remained strong and continued to appreciate. Buyers demand has also stayed high, but buyers are having a “Goldilocks” moment and being more choosey. Unlike in prior markets, buyers aren’t as quick to move on homes if they aren’t the exact right opportunity.
To illustrate this, we can look at the number of properties that had price reductions before selling. For properties in San Mateo County (single-family homes, condos, and townhomes) that closed escrow in May 2023, 79 homes had price reductions. These properties had an average of 80 days on market. The number of price reductions seen on properties is higher than in recent memory.
This is where understanding the current state of our local market is crucial in understanding what’s driving buyers. Proper pricing for the current market is key if your goal is sell quickly, and for the highest possible price. The longer a home sits on market, the more likely a price reduction will become necessary to recapture the attention of buyers.
