San Mateo County home sales market immune to pandemic

The local home sales market experienced growth as well, according to reports from the San Mateo County Association of Realtors, which showed the county’s median home sales price hit $1.8 million in August — an all-time record for the region.

The experience is much different on the rental market, where prices continue to plummet locally. In San Mateo, rents have dropped an average of almost 15% since this time last year, according to reports from rental databases Zumper and Apartmentlist.

Selma Hepp, deputy chief economist with CoreLogic, claimed the two trends are linked as home buyers seeking additional space amid the pandemic are abandoning rental properties and looking to purchase.

Those factors combined with favorable lending environments, a lingering shortfall of available homes and a generation of millennials who were primed to buy this year before the pandemic arrived makes for a strong buying environment, said Hepp.

“Home prices are pushing at the highest pace we could have anticipated during recessionary times. Even with continued uncertainty over economic outcomes, expectations of further accommodative mortgage rates and barring no sudden surge in inventory, home prices are likely to continue marching higher through the autumn,” according to her report.

To further illustrate her point, Hepp’s report suggests national home prices ticked up in August by more than 5% from the year prior and up 1% from July — marking the quickest monthly surge in roughly three years.

The rising home purchase prices are evident on the local housing market too, which shows the county’s median home sale price grew to unprecedented heights in the summer, before tapering off gradually as the sales season cooled in the fall.

The county’s median home sales price reached $1.8 million in August, up about $170,000 from April when the spring’s quarantine put a damper on what would typically be the start of the sales season. Once restrictions were lifted and transactions could begin again, prices gradually ascended through the summer — reaching a peak in August and since dropping down to a median sales price of $1.6 million in October.

Seasonal trends are common in a normal year for the real estate industry, as prices tend to drop during the cooler months and increase from the spring through the summer when most acquisitions occur.

The August peak is the highest median sales price the county has ever seen, topping the previous peak of $1.7 million which was hit in the spring of the past few years, according to SAMCAR figures.

Meanwhile, local rental markets are reeling with the pandemic shuttering amenities in urban centers and workers fleeing historically high prices to exercise the flexibility offered by remote work arrangements. In San Francisco, rents dropped by 23% from last year — amounting to the largest dip in the Bay Area. Apartmentlist suggested San Mateo’s 16% drop and Redwood City’s 13% drop from last year are the second and third biggest rent declines across the region.

Yet despite challenges in one corner of the market, growth in local sales is not expected to stagnate any time soon. According to projections from real estate database Zillow, the county’s sales price could rise by as much as 7% over the coming year.

Hepp is less bullish in her forecast of the national sales industry though, with some expectation that the mounting trends which have combined to push prices so high recently could soon dissipate and soften the market.

“2021 is likely to bring some slowing to home prices as affordability gains, thanks to low mortgage rates, start to dissipate and more inventory from those who have been waiting out the pandemic come to market,” she said.

austin@smdailyjournal.com