In February 2021, the median single-family home price rose to an all-time high, and condo prices continued to show price stability. San Mateo had the largest month-over-month single-family home price gains.
Year-over-year, single-family home prices increased across Silicon Valley counties, up 21% in San Mateo, 10% in Santa Clara, and 18% in Santa Cruz.
As you can see in the graph below, median condo prices were mixed across counties. Unlike single-family homes in San Mateo, condo prices declined. Condo prices increased in Santa Clara and Santa Cruz.
Single-family home inventory remained lower through 2020 relative to 2019, and dropped even further in January 2021, which speaks to Silicon Valley’s desirability. During the pandemic, fewer people wanted to leave, and more people wanted to move to the area. New listings throughout the year were lower than normal, while sales were much higher. In February 2021, Silicon Valley inventory rose slightly, which is normal for this time of year and may indicate a reversion to historical seasonal norms. Single-family home inventory is only slightly below last year’s levels, and as we move into the spring season we will be closely following new listings and total inventory to gauge the market.
The number of condos on the market declined in February but remains higher than last year.
Both single-family home and condo Days on Market declined in February 2021. As we will see, the pace of sales has contributed to the low MSI over the past several months.
We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California (far lower than the national average of six months), which indicates a balanced market. An MSI lower than three means that there are more buyers than sellers on the market (that is, it is a sellers’ market), while a higher MSI means there are more sellers than buyers (that is, it is a buyers’ market). In February 2021, the MSI remained below two months of supply for single-family homes and condos, meaning that the market favors sellers.
In summary, the high demand and low supply present in Silicon Valley have driven home price appreciation. Inventory for single-family homes and condos continues to be a strong indicator of price movements, so the spring season, which is typically when sellers come to market, will likely set the tone for the rest of the year. Overall, the housing market has shown its resilience through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong throughout this period.
We anticipate new listings to slow until sometime in April 2021. As we enter the spring season, we expect demand to remain high and new supply to be absorbed quickly.
As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.
Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones. As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.