San Mateo County is experiencing record lows in for-sale home inventory levels, keeping prices high and deterring some would-be buyers.

In October, 493 single-family homes were listed in the county, a 37% dip from the same month last year. The median home cost was north of $1.9 million for the month, with sales prices averaging 109% of list price, according to real estate database MLSListings. 

“It’s pretty tough for buyers,” Sandra Darrow, a Realtor in the county, said. “Properties are selling for quite a bit over the list price and that’s kind of a tough pill to swallow for a lot of people.”

Recently released data from real estate service CoreLogic show the San Mateo County home price rate of increase remains below the national average, with home prices nationwide up 19.5% in September compared with last year while home prices in the county were up just 8% for the same month. 

Realtors attribute better bang for the buck prices in cheaper areas for the slowed local increase. Alameda County, for instance, saw median prices increase by 17.8%, according to Redfin. Median prices there topped $1 million for the first time this year.

“Houses are a lot bigger and you get a lot more for your money,” explained Burt Tsuei, who has been a Realtor in San Mateo County for 19 years. “All this migration that’s happening right now are typically younger people that are moving out of the city.”

Confronted with a competitive market, those buyers are likely to look beyond San Mateo County. Nearly half of millennial homebuyers report not being able to afford a home in their preferred area, according to a CoreLogic survey. Both Tsuei and Darrow said the majority of their buyers are tech-employed and first-time homeowners.

Tsuei said he attributes supply constraints on the Peninsula to older homeowners who are reluctant to sell. 

Additionally, winter months generally slow the market with fewer homes being listed. But Tsuei said he’s never seen an inventory shortage like this, noting a home in Belmont that recently went for 40% over asking after receiving 26 offers. 

“To put that into perspective, there was only one person that ended up getting that particular house — so that means there are at least 25 people in that same price range,” he said.

The number of days spent on the market fell by one day in October year over year and the offer accepted over the list price rose 6%, according to MLS listings. 

Darrow said homes in more expensive areas are most prone to going for over asking. She said new buyers often experience a few “misses” after submitting bids too low before making an offer that comes out on top. 

Low interest rates, Tsuei said, are key in keeping buyers motivated. And more buyers could begin to look to the county as the pandemic wanes and jobs begin to shift back into the office from remote or hybrid arrangements. 

Interest rates, however, will likely go up, which could slow the market, according to Tsuei. 

“I do think things are going to change,” he said. “And the interest rates have to come up at this point because inflation has really become an issue.”

But for now, he said, “If you’re selling, the world is your oyster.”

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