Silicon Valley Newsletter - October 2025

Real Estate

Silicon Valley Newsletter - October 2025

The Big Story

Quick Take:
  • Affordability remains an issue nationwide, as monthly P&I payments ticked up by 2.90% year-over-year.
  • Mortgage rates are finally starting to decline, as we enter a rate-cutting cycle.
  • Inventories are still growing at a faster rate than existing home sales.
  • Quick observation about Macroeconomics/The Broader Market
 
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.
 

Mortgage rates have begun to decline thanks to the Fed

Recently, the Fed came out and announced a quarter-point cut to the federal funds rate, but that was not the most exciting news that they announced. Fed Chairman Jerome Powell announced that we should expect two more quarter-point cuts before the end of the year, signalling that we are in the beginning innings of a Fed cutting cycle. This, of course, is huge news for the housing market. Despite the fact that many markets have retained much of their post-pandemic gains in value, the housing market has been largely stagnant, with inventories building as home buyers decide to sit on the sidelines and wait.
 

Affordability remains a concern throughout the country

Housing affordability has been a huge problem facing the country ever since the onset of the COVID-19 pandemic. Although many thought that home prices would decrease as interest rates increased, many markets did not see a normalization of home prices. This, of course, has left many prospective home buyers worried about where the market will go as we enter a new rate-cutting cycle. Many fear that lower interest rates may bring a slew of new buyers to the market, pushing home prices up even further, and making home ownership even less attainable for first-time buyers. On the flip side, homeowners stand to benefit in a huge way if declining interest rates lead to a housing frenzy, as they’ll accumulate significant equity in a very small period of time, just like what we saw throughout 2020-2022.

 

Inventories continue to build nationwide

As we mentioned above, the national inventory is quite a bit higher than last year, with 11.68% more homes listed on the market. This really underscores the fact that buyers have decided mainly to throw in the towel and wait for a better chance to purchase a home. When you combine this with the fact that there were 4.88% more new homes hitting the market than this time last year, you have a recipe for growing inventory!

 

Current market dynamics have created an interesting setup for 2026

As we move into the seasonally slow months, the market environment that we’re in is setting up for what could be a very interesting 2026. Inventories are still growing (for now), and interest rates are falling, which could put us in a very interesting position when the spring frenzy begins next year. It’ll be important to keep a keen eye on both the market and broader macroeconomic conditions throughout the fall and winter, so that you and your clients are ready for whatever spring has to throw at you. 

All of this is just what we’re seeing at a national level, though. To get a better idea of what’s going on in your local market, be sure to check out your local lowdown below:

 

Big Story Data

 

Chart of existing home sales and inventory from August 2024 to August 2025; sales dip as inventory rises.Chart of Federal Reserve mortgage-backed securities holdings, peaking in 2022 before declining through 2025.

Bar chart of median monthly principal and interest payments, rising to $2,311 in June 2025 before falling to $2,202 in August.Chart comparing monthly U.S. median home sale prices and 30-year mortgage rates from August 2024 to August 2025.

Chart of monthly U.S. new listings, September 2018 to September 2025, with recurring seasonal peaks and troughs.

 

The Local Lowdown

Quick Take:
  • Median sale prices for condos declined across the board for the second month in a row.
  • Single-family home inventories declined year-over-year for the first time in months.
  • As inventories fall, listings are being bought up at breakneck pace!
 
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

 

Median sale prices remain within their historical “band”

The past month in Silicon Valley was not much more notable than the past few months in terms of median sale prices. We saw some slight movement in both the single-family and condo markets, with the median sale price for single-family homes increasing by 2.56% in San Mateo County and 2.63% in Santa Clara County on a year-over-year basis, while prices declined by 4.30% in Santa Cruz County. When we turn to the condo market, we see median sale prices downtrend across the board on a year-over-year basis, with San Mateo County experiencing a 3.88% decrease, Santa Clara County experiencing a 3.01% decrease, and Santa Cruz County experiencing a 2.53% decrease.

 

Single-family home inventory levels declined precipitously

While inventory levels are still a bit higher than they were last year in the condo market, with 6.65% more active listings when compared to last year, we saw a substantial decline year-over-year in the single-family home market. The SFH market bucked the trend of higher inventory levels that we’ve seen over the past few months, when they reported 5.34% fewer active listings on a year-over-year basis in September. This is largely due to the fact that there were 12.56% more homes sold when compared to last year! This underscores the fact that since there is a bit more economic certainty, homebuyers are back in the market!

 

Condos are spending considerably more time on the market than they did last year

Unfortunately, this exuberance has not translated well into the condo market, as condo listings are spending quite a bit of time on the market. The average condo listing is spending 40 days on the market in San Mateo County (+25% YOY), 28 days on the market in Santa Clara County (+55.56% YOY), and 41 days on the market in Santa Cruz County (+2.5% YOY). The single-family home market tells a much different story, though, as listings in San Mateo and Santa Clara County are scooped up in under 2 weeks, and the average listing in Santa Cruz County spends just 29 days on the market.

 

It’s business as usual 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 buyers’ markets.
 
As always, there is a very low supply of single-family homes in San Mateo and Santa Clara Counties, with just 1.7 and 1.4 months' worth of inventory on the market, respectively. This, of course, makes them buyer-dominated markets. On the flip side, there are 3.9 months' worth of single-family inventory on the market in Santa Cruz County, making it a buyer's market. When we turn to the condo market, the entire market is a buyer's market, with 3.3 months' worth of inventory on the market in San Mateo and Santa Clara Counties and 5.7 months of inventory on the market in Santa Cruz County.

 

Local Lowdown Data

 

 Line chart comparing monthly condo days on market in San Mateo, Santa Clara, and Santa Cruz from September 2023 to September 2025.Chart of Silicon Valley condo listings, sold listings, and inventory from September 2023 to September 2025.

Chart of year-over-year Silicon Valley condo price changes by county, October 2024–September 2025.Line chart comparing monthly days on market for single-family homes in San Mateo, Santa Clara, and Santa Cruz counties.

Chart of Silicon Valley single-family home listings, sales, and homes for sale from September 2023 to September 2025.Bar chart of year-over-year Silicon Valley single-family home median price changes, Oct 2024–Sep 2025.

Line chart of monthly median condo prices in San Mateo, Santa Clara, and Santa Cruz, September 2022–September 2025.Line chart comparing monthly median single-family home prices in San Mateo, Santa Clara, and Santa Cruz counties, 2022–2025.

Line chart compares monthly single-family home inventory in San Mateo, Santa Clara, and Santa Cruz from September 2023 to September 2025.

 

📞 Contact Patrice Horvath today at (650) 520-7675 

Patrice and the Illuminate Properties team specialize in helping Palo Alto, Mountain View, Los Altos, Los Altos Hills, Menlo Park, Portola Valley, Redwood City, San Carlos, Sunnyvale, and Woodside buyers and sellers navigate today’s evolving market with confidence.


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