Silicon Valley Newsletter - March 2025

Real Estate

The Big Story

Quick Take:

Affordability remains a concern across the country despite lower interest rates compared to this time last year.
New homes are being added to the market, with the US seeing a 4.21% year-over-year increase in the number of new listings in February.
Inventory is getting back to healthier levels as we see backlogs begin to build across the country.

Note: You can find the charts & graphs for the Big Story at the end of the following section.

*National Association of REALTORS® data is released two months behind, so we estimate the most recent month's data when possible and appropriate.

Affordability continues to be an issue nationwide

One of the headline issues in the real estate industry over the past few years has been, of course, the affordability (or rather the unaffordability) of homes. Unfortunately for new buyers, and more specifically first time home-buyers, this issue looks like it will persist throughout 2025. Mortgage rates remain comparatively high, and home prices largely have not given back their pandemic-era gains.

This has, of course, made the dreams of homeownership difficult to achieve for countless people around the country. With the median monthly principal and interest payment exceeding $2,100 per month on a nationwide level, people are struggling to afford the purchase of a new home!

New homes are starting to hit the market again

Fortunately for the market, there are plenty of new homes hitting the market though. While there are countless people sitting on the sidelines, waiting for lower interest rates to sell their current home and buy a new one, some of these holdouts are giving up and listing their homes. The writing seems to be on the wall, meaning more and more people are giving up on the thought that we will see lower interest rates in the short term, causing them to list their homes.

This has resulted in a pleasant jump in new home listings, despite us being at the tail end of the slow season. In the month of february, we saw more than 353,000 homes hit the market nationwide. This represents a 4.21% increase on a year-over-year basis, and an 8.15% increase on a month-over-month basis!

Inventories are beginning to build, offering more options for buyers

Since we are seeing new inventory hit the market and a steady level of demand, this is causing inventories to build, which is a great sign for those looking to enter the market! In the month of January, there were 1,180,000 homes listed on the market, representing a 16.83% increase on a year-over-year basis and a 3.51% increase on a month-over-month basis. At the same time, we’re seeing demand stagnate a bit, with 4,080,000 homes sold in January, representing a 2% increase when compared to last year and a 4.9% decrease when compared to last month!

Although a top-tier property will likely end up in a bidding war, no matter if it’s in Kansas City or Calabasas, this increase in inventory could mean that there are some deals to be had on listings that sit on the market for a few weeks.

While there are areas that deviate from the national trends, this is generally what's happening nationwide. Below, you'll find a local lowdown that provides you with the in-depth coverage of your area that you need. We will continue to monitor the housing market and overall economy to help guide you in buying or selling your home.

Big Story Data

Line chart of monthly existing home sales and inventory from January 2024 to January 2025. Chart of Federal Reserve mortgage-backed securities holdings, peaking near $2.7 trillion in 2022 before declining.

Bar chart of median monthly principal and interest payments, December 2023 to December 2024. Chart of monthly median U.S. home sales prices and 30-year mortgage rates, January 2024–January 2025.

Line chart of U.S. monthly new listings, February 2018–February 2025, showing recurring seasonal peaks and dips.

The Local Lowdown

Quick Take:

San Mateo and Santa Clara continue to see incredibly strong growth in median sale price, while Santa Cruz remains mostly flat when compared to this time last year.
Inventories are beginning to build in Silicon Valley, with the number of active listings increasing by more than 16% when compared to last year!
New listings continue to be scooped up at an incredibly rapid pace, with the average listing in Santa Clara sitting on the market for just 8 days.

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

San Mateo and Santa Clara Counties see incredibly strong growth

Throughout the entirety of 2024, Silicon Valley remained seemingly unphased by the increase in mortgage rates, and the prevailing thought that interest rates would remain higher for longer. As of right now, it looks like the area is unlikely to buck that trend this year, as we see stellar growth in both San Mateo and Santa Clara Counties once again. These markets saw an 11.17% increase and a 10.42% increase, respectively, on a year-over-year basis.

Although the median sale prices in Santa Cruz are not growing nearly as quickly as they are in Santa Clara and San Mateo counties, the market is still holding up well, ending February with a 1.42% year-over-year increase in median sale prices.

Inventories are increasing in terms of both single-family homes and condos

When you see the type of growth that we’re seeing in Silicon Valley home prices, you might expect that inventory is shrinking. However, that couldn’t be further from the truth. We saw a 19.66% increase in inventory over the course of the past month and a 16.73% increase when compared to the same time period last year. Interestingly enough, though, there were 2.34% fewer homes sold in the month of February when compared to last year. Silicon Valley will need to see a reversal in this if the market is to hold onto its stellar growth!

Despite growing inventories, buyers are closing on new listings faster than ever

While inventory is increasing and fewer homes are being sold, the ones that are selling are moving incredibly quickly, with the average listing in San Mateo County only lasting 10 days on the market. The market in Santa Clara County is even more competitive, with the average listing lasting a mere 8 days on the market! This shows that the demand is there for great properties in the area, and that trend isn’t likely to reverse anytime soon!

Sellers continue to have bargaining power in Silicon Valley

When determining whether a market is a buyers’ market or a sellers’ market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a seller’s market, whereas markets with more than three months of MSI are considered buyer’s markets.

With 1.2, 1, and 2.5 months' worth of single-family home supply on the market, San Mateo, Santa Clara, and Santa Cruz Counties are all staunchly sellers’ markets. However, when it comes to the condo market, things are considerably more balanced. There are 3 and 3.5 months’ worth of condo supply on the market in San Mateo and Santa Cruz Counties, respectively, which means there might be some room for buyers to make a deal! However, Santa Clara County only has 2.2 months’ worth of condo supply on the market, so the sellers certainly have the upper hand at the negotiation table there.

Local Lowdown Data

Line chart of monthly median single-family home prices in San Mateo, Santa Clara, and Santa Cruz. Bar chart of year-over-year home price changes in San Mateo, Santa Clara, and Santa Cruz counties, February 2024–January 2025.

Line chart comparing monthly median single-family home prices in San Mateo, Santa Clara, and Santa Cruz, January 2021–January 2025. Chart comparing year-over-year median condo price changes across three Silicon Valley counties, February 2024 to January 2025.

Chart of Silicon Valley single-family home listings and for-sale inventory, monthly from February 2023 to February 2025. Line chart comparing monthly days on market for single-family homes in San Mateo, Santa Clara, and Santa Cruz, February 2023–February 2025.

Chart comparing monthly condo days on market in San Mateo, Santa Clara, and Santa Cruz, February 2023–February 2025. Line chart compares months of single-family home supply in San Mateo, Santa Clara, and Santa Cruz from February 2023 to February 2025.