San Mateo County median home prices spike

Out of all nine Bay Area counties, San Mateo has the highest median house values for single-family homes with two or more bedrooms.

The 30-year fixed-rate mortgage hovered around 7% between May and June, a slight decline from the staggering 7.8% highs at the end of 2023. The continuously high borrowing costs had caused home sale price declines in some metro regions over the past year, but the drop was minimal in the Bay Area’s notoriously expensive market and especially San Mateo County, which still saw slight increases.

“Even with the interest rate more than doubling, it has not slowed down the buying activity. It took some buyers out, but in our area … a lot of them are not as interest-rate sensitive, and they are making up a large percentage of the buying population,” Robert Pedro, owner of Signature Realty, said. “If you work for Nvidia, you’re buying a house.”

Coldwell Banker Realtor Vicky Yu said the anticipatory interest rate cuts have created a sense of urgency for those who want to buy before borrowing costs drop, as that often means home prices will subsequently increase.

“Everybody had the expectation that the Fed is going to drop the interest rate, even though it hasn’t, and buyers went into the market with that kind of expectation,” she said. “Everybody tried to grab their dream home before it actually happened … because you want to get the house while it’s still low and later you can refinance.”

The number of home sales is about 11% higher year-over-year, the highest amount since 2022, according to data from Compass Realty last month. Yu said she’s noticed listings go up toward the end of May, but with a recent holiday weekend this month and summer travel, it’s slowed down more since then.

The number of homes on the market in San Mateo County has generally been on a downward trend over the past couple decades — the number of new listings in the county between 2011 and 2023 nearly halved — largely contributing to a pricey real estate market.

Historically, property owners have been less incentivized to sell, in part due to Proposition 13, which caps property tax increases based on the assessed value at the time of purchase. Once a change of ownership occurs, however, the tax rate is reconfigured based on the most recently assessed value.

But the capital gains tax imposed on homeowners when selling their properties is also one of the biggest deterrents to doing so, Pedro said. The impact is nationally felt and particularly so in expensive markets such as the Bay Area. If passed by Congress, the More Homes on the Market Act would allow homeowners to pay less in capital gains taxes when selling their homes, adding more supply to the market.

“I run into people all the time who want to sell but don’t, because they don’t want to pay the capital gains tax,” he said. “I know personally at least 10 people that would sell their homes as soon as they can if that passes.”

But with the prospect of a September rate cut and economic uncertainty surrounding the election, Yu said there is a good chance the real estate market will stay warm throughout the end of the year, with minimal winter slowdowns.

“The job market and stock market are the two key factors that fuel the real estate market,” she said. “And before the election, they always try to keep the stock market up, so I would assume the market is going to do really well for the rest of the year.”