The Local Lowdown: February 2024

Michelle Kim | March 2, 2024

The Local Lowdown

Quick Take:

Single-family home prices appreciated year over year, up 22% in San Mateo, 12% in Santa Clara, and 2% in Santa Cruz. We expect prices to remain fairly stable until interest rates drop further and more sellers come to the market.
Active listings in Silicon Valley fell 3% month over month, even as new listings jumped 137%. As mortgage rates drop, we will likely see more new listings in the first quarter, which should help alleviate some excess demand and drive more sales.
Months of Supply Inventory rose from December 2023 to January 2024, as new listings outpaced sales. However, MSI still indicates a sellers’ market for single-family homes and condos in Silicon Valley.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

Year over year, median prices rose in January 2024 for single-family homes and condos

In Silicon Valley, low inventory has more than offset the downward price pressure from higher mortgage rates, and prices generally haven’t experienced larger price drops from higher mortgage rates. Month over month, in January, the median single-family home price rose 10% in San Mateo and 13% in Santa Cruz, while Santa Clara prices fell 1%. However, year over year, prices were up 22% in San Mateo, 12% in Santa Clara, and 2% in Santa Cruz. Condo prices were mixed across Silicon Valley both month over month and year over year. We expect prices in Silicon Valley to remain below peak in the winter months, but as interest rates decline, prices could easily reach new highs in 2024 with the exception of single-family homes in Alameda, where prices are far below peak.

High mortgage rates soften both supply and demand, so ideally, as rates fall, far more sellers will come to the market. Rising demand can only do so much for the market if there isn’t supply to meet it. Unlike 2023 inventory, 2024 inventory has a much better chance of following more typical seasonal patterns.

New listings rose 137% month over month

Single-family home and condo inventory barely increased at all last year, which is far from the seasonal norm. In 2023, inventory didn’t have anything resembling the typical sine wave, since far fewer sellers came to the market, especially in the first half of the year, and the low inventory and fewer new listings slowed the market considerably. New listings were exceptionally low, so the little inventory growth last year was driven by softening demand. Typically, inventory peaks in July or August and declines through December or January. However, in 2023, inventory peaked in October, further highlighting the atypical supply trend. In November and December, inventory, sales, and new listings dropped. However, in January, new listings rose 137% month over month, and homes coming under contract increased 21%. Year over year, inventory is down 6%, but sales and new listings are up 10% and 24%, respectively.

Months of Supply Inventory in January 2024 indicated a sellers’ market

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The Silicon Valley market tends to favor sellers, which is reflected in its low MSI. MSI fell sharply in the first quarter of 2023 before gently trending higher from May to November. In December, MSI declined sharply, but rose again in January. Currently, the Silicon Valley market favors sellers for single-family homes and condos.

We can also use percent of list price received as another indicator for supply and demand. Typically, in a calendar year, sellers receive the lowest percentage of list price during the winter months, when demand is lowest. January tends to have the lowest average sale price (SP) to list price (LP), and the summer months tend to have the highest SP/LP. The January 2024 SP/LP was 5% higher than last year, meaning we expect sellers overall to receive a higher percentage of the list price in 2024 than they did in 2023.

Local Lowdown Data

Line chart of real earnings from 1980–2023, showing a sharp 2020–2022 spike and comparison with expected growth. Line chart of monthly median single-family home prices by county, January 2022 to January 2024. Bar chart of year-over-year single-family home price changes in San Mateo, Santa Clara, and Santa Cruz counties, February 2023–January 2024. Line chart compares monthly median condo prices in San Mateo, Santa Clara, and Santa Cruz counties, 2022–January 2024. Chart of Silicon Valley single-family home sales, new listings, and for-sale inventory from January 2022 to January 2024. Chart of Silicon Valley condo inventory, new listings, and sold homes from January 2022 through January 2024. Chart comparing Silicon Valley days on market for single-family homes and condos, January 2023 to January 2024. January 2024 days-on-market chart comparing single-family homes and condos across three counties. Chart comparing monthly Silicon Valley condo and single-family home inventory from January 2023 to January 2024. January 2024 months of supply by county for single-family homes and condos.