Bay Area real estate prices have skyrocketed over the past 10 years. With prices having risen so much, many are starting to wonder if the upward trend can continue. In this report we’ll provide a summary of the Peninsula real estate market, covering the areas of San Francisco, San Mateo County, and Santa Clara County.

A Short History – The Past 10 Years

These counties have seen very strong price appreciation since January of 2010, on the heels of the 2008-2009 recession. (1)

Today’s Market

Of all the variables affecting real estate, supply and demand can be seen as the two that matter most.

Looking at supply side data, the year-over-year change in inventory (e.g., number of homes for sale) has decreased slightly in San Francisco and increased in San Mateo and Santa Clara

Higher inventory typically means a “buyer’s market,” as there are more homes to choose from. We see that occurring in San Mateo and Santa Clara, but not San Francisco.

On the demand side, an important variable is mortgage rates. As mortgage rates rise the cost to borrow money for a home increases, which typically has a negative impact on home prices. The inverse is also usually true, as lower mortgage rates tend to increase purchase activity and housing prices.

Looking at today’s rates, the 30-year fixed mortgage rate, which reached nearly 5% in November of 2018, has fallen to 3.6%: (3)

In the table below we see the net result of these two drivers and how they’ve affected home prices:

In San Francisco, with decreasing inventory and low mortgage rates, prices have risen 6.0% year-over-year. However, in San Mateo and Santa Clara counties, the increase in inventory has outweighed the benefit of lower mortgage rates. This has led to a slight decrease in values, which is something we have not seen in a long time (4). It’s also worth noting that these small declines have most likely been moderated by the decline in interest rates.

We see the same trend in “Median Price Per Square Foot.” San Francisco is experiencing an increase, while San Mateo and Santa Clara counties are experiencing a decrease (5):

Another metric that reflects the state of the market is “Median Days on Market,” which provides insight on how quickly homes are moving (6):

We again see San Francisco performing well, whereas the time to sell a home in San Mateo and Santa Clara has increased markedly.


San Francisco’s real estate market has remained consistent. Inventory is slim, and with the benefit of low mortgage rates homes have been selling quickly, leading to an increase in home prices.

On the other hand, increasing inventory in San Mateo and Santa Clara counties is helping to drive a slowdown. That has led to a decrease in prices, which is a change from the upward trajectory that we’ve become accustomed to. What we don’t know is if this trend is a temporary setback or the beginning of a longer-term trend.

Written by: Will Steinberger

The information, analysis, and opinions expressed herein are for general and educational purposes only. Nothing contained in this commentary is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type The material has been gathered from sources believed to be reliable, however Opes cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice.