San Mateo County housing market flattens, but prices continue to climb 

click to enlarge Home prices in San Mateo County are up 22 percent since June 2012, but housing inventory has dropped by 27 percent since 2012.
  • Home prices in San Mateo County are up 22 percent since June 2012, but housing inventory has dropped by 27 percent since 2012.

After a meteoric recovery, San Mateo County's residential real estate market might be flattening, but that has not driven down prices, which remain high, according to a recent report.

Sales of new homes in the county are down by 10 percent since May, and there were 14 percent fewer listings in June, according to the report by MLS Listings.

The slower rate of home sales may be attributed to climbing mortgage rates and buyers exhausted from bidding on multiple properties at a time and often losing the bids, said James Harrison, CEO of MLS Listings.

The cooling market has not frozen home prices, which continue to rise sharply — up 6 percent in the past month, and 22 percent since June 2012, according to the MLS Listings report.

"It's a great time to sell, and anyone who is thinking about doing it, should do it now," said Susan Tanner, a real estate broker with Dreyfus Properties.

Tanner said cooling off after a spring run-up on housing is typical in the county. Current home prices — with a median value of $960,000 — will likely hold for the remainder of the year, Tanner said.

The homes that are hitting the market are receiving multiple offers.

"There were 17 offers for a house listed for $900,000," Tanner said.

One reason for the competitive nature of the market is lack of inventory. According to the MLS Listings report, housing inventory in San Mateo County has decreased by 27 percent since 2012, with only about 30 new homes going onto the market in the past month. Homes are selling about twice as quickly as they were in 2012.

Fewer homes being listed has not lessened the demand, especially with the regional economy's strength and the proximity to technology companies, which have mostly experienced continued success, Tanner said.

With many workers who work at tech companies in nearby Silicon Valley wanting to live near the office, markets in Mountain View, Palo Alto and Menlo Park have become too competitive for many first-time buyers. The buyers are instead being pushed further north into communities such as Redwood City and San Carlos. However, Tanner doesn't see buyers interested in areas as far north as South San Francisco or Daly City.

Even in those cities north of Menlo Park, entry-level homes are running for about $1.5 million, Tanner said. And many buyers assume they have to bid at least 10 percent above the asking price, which still can be insufficient to secure a deal, Tanner said.

One part of the market in which there is less competition in purchasing is in the luxury market, which includes homes that cost more than $1.5 million, Tanner said.

Tanner cautioned that while overall trends can be helpful, the ever-important role of location in real estate pricing remains especially true on the Peninsula, where markets are as diverse as the weather.

"Much like there are micro-climates throughout the region, there are micro-real estate markets too," Tanner said.

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