South Bay Peninsula December '24 Real Estate Update Ascend RE

The Local Lowdown

Quick Take:

Median home prices are slightly below peak levels across Silicon Valley. We expected price contraction after peaking in the second quarter, which is the seasonal norm. Prices will likely decline for the next two months.
Total inventory fell 29.4% month over month, as new listings fell more than sales. We expect inventory to decline and the overall market to slow over the next two months.
Months of Supply Inventory indicated a sellers’ market for single-family homes and condos with the exception of Santa Cruz, which is more balanced

The median single-family home prices are up year to date and year over year for single-family homes

In Silicon Valley, home prices have remained resilient despite rising mortgage rates, with growing inventory and high demand offsetting downward pressure. As of November, median prices rose year-to-date, except for Santa Cruz condos, with single-family home prices up 19% in San Mateo and 13% in Santa Clara year-over-year. Prices peaked in summer and are expected to decline slightly over the next two months. While rates near 6% were more tolerable, the recent rise toward 7% is expected to further slow sales.

Inventory, new listings, and sales fell

The 2024 housing market has improved steadily, with inventory levels exceeding expectations, though single-family home inventory remains near record lows. In 2023, inventory followed seasonal trends but was significantly depressed. This year, increased new listings boosted inventory, with condo inventory hitting a four-year high in September before declining. Single-family home inventory is down 25% year-over-year due to a sharp drop in new listings. Inventory, sales, and listings in 2024 are expected to follow typical seasonal patterns.

Months of Supply Inventory indicated a sellers’ market in November

Months of Supply Inventory (MSI) measures how long it would take for current listings to sell at the current sales rate. In California, a balanced market is around three months of MSI. Below three months indicates a sellers’ market, while above three suggests a buyers’ market. Silicon Valley typically favors sellers with a low MSI, though in 2024, MSI rose, especially in Q2. By October and November, MSI dropped across markets, signaling a sellers’ market for single-family homes and condos, except in Santa Cruz, where the condo market was more balanced.

The Bottom Line

In 2024, Silicon Valley’s housing market stayed strong, with rising median single-family home prices despite higher mortgage rates. Inventory has improved, though single-family home inventory remains low. MSI in November indicated a sellers' market, with most areas favoring sellers, except for the Santa Cruz condo market, which was more balanced. Prices peaked in the summer, and slight declines are expected in the coming months.