San Mateo County sees record-low home sales

Record-high fixed-rate mortgage rates certainly played a factor in the transaction dip, reaching over a two-decade high this year at 7.79% and 7.03% for 30-year and 15-year rates, respectively. And while the steady rate decrease over the past eight weeks indicates a sign of reprieve for some potential buyers, Peter Gum, Realtor at Keller Williams Peninsula Estates, said the currently 6.61% 30-year fixed mortgage rate remains cost-prohibitive for many residents, especially millennials and potential first-time homebuyers. Across the country, the former is accepting the stubbornly expensive borrowing costs and are either biting the bullet on such rates if they can afford to do so, or simply continuing to rent, he said.

“There’s this psychological sense of the new normalcy. It’s been low for all these years, but for new buyers coming in on the market, there’s more of a sense of, ‘well, this is how it is,’” he said, adding the pent-up demand last year may result in a spike in transactions around springtime.

While high interest rates throughout 2023 caused a dip in home prices in other metro areas nationwide, San Mateo County still saw a slight increase in the median single family home prices — from $1.735 million in the fourth quarter of 2022 to $1.741 million last quarter — something that can be in part explained by a decadeslong dip in the number of listed homes, culminating in last year’s record low inventory in at least two decades, according to the MLS data.

The area consistently ranks first or second as having the highest median home prices out of the Bay Area counties, surpassing San Francisco, Alameda and Marin counties in median home sale prices in the third quarter of last year.

“Prices just keep going up every year. … Nothing seems to be able to stop that, and that’s a, largely, function of nobody selling. So there’s fewer homes for the same amount of demand or even more demand,” Gum said, partially attributing the lack of listings to a corresponding decrease in selling incentives, such as increased capital gains taxes. “The millennials are the biggest generation that should be buying a lot of homes, and they’re not jumping in quite with the verve that the prior generations have. And boomers are holding onto their properties, and they’re not letting them go.”