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San Mateo County vs Santa Clara County Real Estate

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House Prices Converge In 2022

San Mateo County house prices vs. Santa Clara County house prices

For many years, San Mateo County house prices per sq. ft. were higher than Santa Clara County’s. In 2022, this changed, and the prices became very similar. With this occurring shortly after COVID restrictions being lifted, it was probably at least partially due to people leaving high-density areas such as San Francisco and working remotely.

Flat House Prices Near San Francisco

San Bruno house prices vs. San Mateo County house prices.

Cities near San Francisco, including Brisbane, Daly City, Pacifica, San Bruno, and South San Francisco, have had flatter house prices than San Mateo County averages.

Other Real Estate Trends Converge

San Bruno house age vs San Mateo County house age

The average age of a San Bruno house sold, shown by the strong red line in the graph above, increased more in 2019 than the average age of a San Mateo County house sold, shown by the faint red line. The median ages of the two areas track each other closely and rose steadily, indicating that fairly new houses had far fewer sales after 2019.

Considerations For Real Estate Trends

Rapid changes to real estate trends can occur for a number of reasons: economic crisis, interest rates, government housing policies, pandemics, speculation, etc. Some of the changes can be fairly short-term, such as the 2000 dot-com boom, while others have long-lasting impacts. Although a single event may trigger a rapid change, the impact on a city is modified by other factors.

“The Old Paradigm Of Low Interest Rates … Is Not Going To Return”

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Ken Rosen, the chairman of the Fisher Center For Real Estate, at Berkeley’s Hass School of Business, talked recently about future real estate trends. Two points stood out: 1.) The old paradigm of low interest rates is not going to return in the foreseeable future. 2.) The doubling of debt service costs and cap rates has decreased values and now may be the best opportunity to buy real estate below replacement costs we’ve had since the early 1990’s.

Hillsborough House Prices

Hillsborough house prices

Hillsborough real estate trends show relatively flat house prices after the price drop at the beginning of 2022. The drop in values Dr. Rosen talked about doesn’t apply to Hillsborough houses. However, he also brought up replacement costs. The increased financing cost and increased cost of materials has brought the construction of new market rate apartments to a halt in San Jose. Replacement costs have discouraged builders from starting new housing projects. With neither interest rates nor building costs likely to decrease, waiting for change before trying to achieve your housing goals is not likely to be a good plan.

Real estate economist Ken Rosen on YouTube.

Real Estate Trends – House vs. Condo

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Perhaps now is a particularly good time for first time home buyers to buy a condo.

In our 2021/01/09 webinar & our 2021/01/10 Chinese webinar we pointed out a difference in Silicon Valley real estate trends for houses vs. real estate trends for condos. House prices have been climbing a little faster than condo prices.

Santa Clara County House Prices (per sq.ft.)
Santa Clara County Condo Prices (per sq.ft.)

The incoming Biden administration has talked about a $15,000 tax credit for home buyers. The home prices in Silicon Valley are high enough that the credit will be more meaningful for condo buyers. With the difference in price between houses and condos recently increasing, and a potential tax credit driving up demand, buying a condo now could prove to be an even better than the normal choice for first time home buyers. Rent vs. Buy considerations, and low mortgage interest rates, make owning any home significantly better than renting for most Silicon Valley residents.

Condo owners are typically younger and more mobile than the average home buyer. The spread in house vs. condo prices is probably a short term reaction to the pandemic.

Very long term trends are still likely to favor homes with yards over homes without yards. New construction in Silicon Valley is nearly always townhouses and condos because of the high cost and limited availability of land. The expected increase in homes with little or no yard probably won’t keep up with demand, so all prices are likely to rise, but the number of homes with yards is likely to decrease as older housing is replaced with newer housing. Your own private outdoor space is slowly headed towards becoming an expensive luxury.

Buying a condo now should be an excellent path towards owning a bigger home in the future.