February 2025: Real Estate Trends in the SF Bay Area from San Mateo's Top Realtors

Kevin Peterson
Feb 10
10 min read

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Executive Summary: Five SF Bay Area Counties Proprietary Market Analysis

The February 2025 market showed a mixture of seller’s markets (in San Mateo and Santa Clara) and neutral conditions (in Alameda and Contra Costa), with decreasing mortgage rates making now a potentially great time for buyers.

Sellers, especially in San Mateo and Santa Clara, can expect high demand, with homes selling quickly and potentially at above asking prices. The recent dip in the stock market due to uncertainty around the Trump tariffs is also causing some to want to transition into real estate versus more stock fluctuations.

If you’re a buyer in search of a single-family home, you may need to act fast in high-demand areas. If you’re focused on condos, there may be more negotiating room as these properties spend slightly more time on the market.

Outlook for March 2025:

The San Francisco Bay Area real estate market is expected to remain strong in March, but rates and global economic factors (e.g., tariffs) will likely have a moderating effect. Here’s a breakdown of what buyers and sellers should expect:

For Buyers: If you’re in the mid-range market (i.e., homes priced $800K-$2.8M), you’ll find more options as inventory increases. If you’re looking in luxury markets, proceed with caution, as stock market volatility could impact the high-end homebuyer’s purchasing power.
For Sellers: High-demand areas like San Mateo and Santa Clara counties will continue to see strong buyer activity, especially for homes below $2.8M. Luxury sellers may face some slowdown if stock market volatility continues. However, the potential for increased construction costs from tariffs could push new home prices higher, benefitting sellers in the new construction market.

While the market may experience slight fluctuations, the underlying strength of the Bay Area economy and continued demand in key areas should sustain a competitive real estate market in the 2025 Spring market.

Pricing Month-over-Month (January to February)
- Month-over-month, home prices continued their upward trajectory, especially in San Mateo and Santa Clara counties, with single-family homes seeing the most notable increases. Condos showed more moderate increases or slight decreases, particularly in San Francisco county.
Pricing Year-over-Year (February 2024 to February 2025)
- Year-over-Year price increases in San Mateo and Santa Clara counties saw solid appreciation of 8-9%, while San Francisco experienced slower growth in both single-family homes and condos. Prices in Alameda and Contra Costa counties were also steady, showing moderate growth.
List-to-Sale Price Ratio
- San Mateo and Santa Clara counties continue to experience a strong seller’s market, with List-to-Ask Ratios exceeding 106%. Sellers in these areas are benefiting from high demand and competitive bidding.
- In contrast, San Francisco and Contra Costa counties are seeing moderate market conditions, especially in the condo sector. In Contra Costa, homes are generally selling at or near the asking price, but not necessarily above it, reflecting more neutral conditions.
- Alameda County is in a balanced market, similar to Contra Costa. Homes here are typically selling close to the list price, with minimal fluctuations, indicating a more stable market overall.

The charts below are month-over-month and year-over-year heat maps of pricing in the SF Bay Area. They are grouped by county and property type (Condo, Single Family Home, Townhouse). The metrics are Price per Square Foot, Days on Market, how many sold, and the List to Sales Price Ratio.

Green highlighted cells indicate items keeping prices up in comparison to previous month's metrics.
Red highlighted cells indicate the opposite, i.e downward pressure on sales price which favor buyers more.
Enlarge each county Heat Map by clicking on each of the images.

20-Year vs. 10-Year Appreciation

Typically, single-family home prices in the SF Bay Area have doubled every decade since the 1980s. Given the robust SF Bay Area economy, we expect these values to stay elevated, particularly as inventory levels remain close to historic lows and geographical limitations restrict the construction of additional homes.

However, condos sales prices have been increasing less since about 2018 as HOA fees become bloated from expensive insurance costs and many home owners are seeking more space in a post-pandemic world.

SF Bay Area Inventory Metrics

Active Listings

The overall number of homes available on the market. An increased inventory combined with a slower selling rate typically benefits buyers, whereas decreased inventory and a faster selling rate usually benefit sellers.

Inventory Levels
- Active Inventory Changes:
  - San Francisco County: Active listings increased by 2.5% from January to February 2025, reaching 1,291 homes for sale.
  - East Bay (Alameda and Contra Costa Counties): The East Bay experienced a 26.39% rise in active listings, with new single-family home listings increasing by 21.59%.
  - Silicon Valley (Santa Clara County): Silicon Valley's condo market stood out with a 36.62% rise in active listings and a 45.2% increase in new condo listings, indicating potential buying opportunities.
  - Mid-Peninsula (San Mateo County): San Mateo county saw a 9.0% increase in active listings compared to January 2025, with 121 homes for sale in February.
20-Year vs. 10-Year Inventory Levels
- Every year we see active and sold inventory go up then down, a predictable cadence. How high or low is dependent on the next metric, Months of Inventory or the rate of change in inventory being sold.
- In 2024, we saw historically low inventory levels (below 2,300 active single family home listings across the five counties); active inventory has now rebounded above 4,000 active listings. If this trend continues, there could be some downward pressure on sales prices due to the amount of supply being on. the market.
- The graphs below show both a 20-year and 10-year time horizon for both single family homes and condos that are on the market (active) versus sold.

Months of Supply

The time it would take to sell all active listings at the current sales rate.

20-Year vs. 10-Year Months of Supply
- This metric tells us how hot the markets are currently, i.e. the rate of change. If no new listings were added, this metric tells us how long it would take to sell all the remaining active homes. In the last 10 years, we have been in a Seller's Market except for condos in the year of 2020, when the COVID Pandemic hit.
- Buyer's Market = Over 6 months of supply
- Seller's Market = Under 3 months of supply
- February single family homes were at 2.2 while condos were at 3.9 months of inventory.

Demand Indicators

% Over Asking vs. DOM (12-Month Look Back)

How much over asking a home sold for and how fast it was sold, i.e. Days On Market are the next two Key Performance Indicators (KPIs). These show how much demand there is for SF Bay Area single family homes and condos.

Days On Market measures how long it takes for homes to sell.

Buyers: Longer DOM gives more room for negotiation.
Sellers: Shorter DOM indicates strong interest.
February saw the first decline in 3 months to the Days on Market while the Sales Price to List Price Ratio shot up for single family homes at 107% and condos bounced back up to 101% of asking.

Pending Sales

Homes under contract can show how quickly the market is moving.

The graphics below display the pending sales for all five counties, categorized by home types and price levels. The price tiers with the highest volume of pending sales for each home type and county are highlighted in yellow. For example, in San Mateo County, the most condos are sold at prices below $800K, while the most single-family homes and townhouses are sold between $800K and $1.8M. The color coding or heat map indicates changes compared to the previous month, with positive impacts on sales prices highlighted in green and negative impacts highlighted in red.

Similarities Across Counties:

Price increases and decreased DOM were observed across most price ranges, signaling a strong market with increased buyer demand.
Pending sales generally rose in San Mateo, Santa Clara, Contra Costa, and San Francisco, reflecting an overall active market.

Differences Among Counties:

San Francisco had slower condo sales with more inventory, leading to longer DOM and less competitive prices for condos compared to other counties.
Alameda showed some price decreases, particularly in lower price ranges, suggesting softening in demand for those segments.
Contra Costa showed a stronger pending sales trend and higher price per square foot, especially for homes priced $1.3M-$2.8M, indicating strong demand in the suburban market.

These trends provide valuable insights for both buyers and sellers across these counties. If you’re buying, you may find more competitive conditions in San Mateo and Santa Clara, while San Francisco condos may offer more opportunities. Sellers in San Mateo and Santa Clara will likely see higher demand, while Alameda sellers may face a slower market.

Macroeconomics

Mortgage Rates

Month-over-Month Change:
From January to February 2025, the mortgage rate decreased from 7.07% to 6.72%, a 35 basis point drop. This reflects a slight easing in borrowing costs due to moderating inflation, a more cautious Fed, strong employment data, and global market conditions influencing bond yields. While still higher than historical lows, this decrease could boost activity in the real estate market, especially for buyers in the $800K-$2.8M range. However, if inflation rises or the Fed takes a more aggressive stance, rates may climb again.
Year-over-Year Change:

February 2025 saw a 7.78% increase in purchase applications and a 39.02% rise in refinance applications, signaling a strong surge in refinancing activity.

10-Year Treasury

In February 2025, the 10-year Treasury yield decreased by 30 basis points from 3.75% to 3.45%, driven by increased demand for U.S. Treasuries as a safe-haven investment, moderating inflation, and steady GDP growth. Investor expectations that the Federal Reserve would pause or slow down rate hikes, along with a strong job market and low unemployment, helped ease fears of rising prices. This shift in investor sentiment, coupled with global uncertainties and optimism that the Fed’s tightening cycle was nearing its end, contributed to the decline in yields, offering potential relief for borrowers.

Stock Market (Performance in February 2025)

In February 2025, both the S&P 500 and Nasdaq posted strong gains, with the S&P 500 rising by 2-3% and the Nasdaq up 3-4%, driven by solid corporate earnings, especially from tech companies, and optimism about economic stability. Positive earnings in tech, healthcare, and consumer discretionary sectors, along with moderating inflation and a strong labor market, fueled market confidence. The Federal Reserve’s cautious stance on rate hikes supported investor sentiment, although caution remained due to concerns over geopolitical tensions and potential future rate hikes. Overall, the market showed positive performance but with underlying uncertainty.

FED (Federal Reserve)

In February 2025, the Federal Reserve kept the federal funds rate steady at 5.25%-5.50%, pausing after aggressive hikes in 2023-2024. Inflation slowed to 3.1%, and the Fed remains cautious, unlikely to raise rates unless inflation resurges. The Fed continued Quantitative Tightening (QT), reducing its balance sheet by $95 billion/month as it works to lower it to $7.5 trillion by year-end. While QT helps curb inflation, it raises government borrowing costs, potentially exacerbating the federal deficit.

Inflation

In February 2025, U.S. inflation moderated, with the CPI increasing by 2.8% year-over-year, driven by declines in airline fares and gasoline prices. However, the Trump administration’s new 25% tariffs on steel and aluminum, effective March 12, 2025, could raise production costs and lead to higher consumer prices. This policy has introduced market volatility, with concerns about a potential global trade war. The Federal Reserve is likely to maintain current interest rates due to economic uncertainty from these tariffs.
These trade policies could impact the Bay Area real estate market by increasing construction costs, potentially raising home prices and delaying new projects. This may further strain affordability, particularly for entry-level homes and luxury condos, while also affecting investor sentiment in both commercial and residential markets.

Employment

U.S. Employment:
- The U.S. economy added 151,000 jobs, slightly below the expected 170,000. The national unemployment rate rose to 4.1% from 4.0% in January.
Bay Area Employment:
- The tech sector continued to downsize, with over 2,000 tech jobs cut in early 2025. Notable layoffs included Salesforce (153 positions), Okta (180 positions), and Unity Technologies (Behavior team). The biotech sector also saw significant cuts: ALX Oncology reduced its workforce by 30%, Bio-Rad cut 350 jobs (5% of its workforce), and CytomX laid off 40% of its employees.
Impact on Bay Area Real Estate:
- The tech layoffs and biotech job cuts may lower housing demand in certain price points, particularly for luxury properties. However, the continued presence of major employers and robust sectors like healthcare and education may help stabilize certain markets. For buyers and renters, affordability may become a more pressing concern, with potential shifts toward more affordable housing options in suburban areas like Contra Costa and Alameda counties.

Overall, while some sectors like tech and biotech face challenges, the Bay Area real estate market will continue to be shaped by shifts in employment, housing demand, and broader economic dynamics.

Working in the SF Bay Area

Remote Work (aka Work From Home)

In 2025, remote work in the San Francisco Bay Area has decreased, especially among large tech companies enforcing stricter return-to-office policies. Companies like Amazon, Google, Microsoft, Meta, and Apple are increasing in-office requirements, signaling a shift toward more in-person work to enhance collaboration and company culture.

Office Space

The office space market is still challenged by high vacancy rates, especially in traditional office buildings. However, demand for large spaces from AI companies like OpenAI, Scale AI, and Databricks remains strong, with 4.7 million square feet leased since 2023.

Startups

AI, tech, and biotech startups are thriving in the Bay Area, with companies like Perplexity AI, Deepgram, and Hinge Health securing significant funding. However, industries like electric vehicles (EVs) are facing challenges, with some startups going bankrupt. Venture capital continues to focus on AI and biotech, though with more caution due to market uncertainty.

These dynamics are influencing the local real estate market, driving demand for high-end housing in prime areas as the tech and biotech sectors expand, while the struggles in traditional industries may impact commercial real estate demand.

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