January 2025: Real Estate Trends in the SF Bay Area from San Mateo's Top Realtors
- Kevin Peterson
- Feb 10
- 9 min read
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Executive Summary: Five SF Bay Area Counties Proprietary Market Analysis
In January 2025, the SF Bay Area housing market experienced a 50.9% decrease in inventory from the previous month in San Francisco, with other counties reaching their lowest levels in 12 months, resulting in a robust sellers' market. Although a decline in sales prices from month-to-month is typical due to the seasonal sales cycle, sales prices rose year-over-year by up to 16% in Santa Clara County, highlighting the strength and resilience of the SF Bay Area housing market.
Outlook for February 2025: Unemployment is expected to rise slightly to 5.6%, which could affect consumer confidence, while inflation and higher borrowing costs have further tightened market conditions. Despite these factors, the market remains competitive with high demand and low supply.
County | Median Home Price | MoM Change | YoY Change | Average DOM |
San Mateo | $1.75M | -8% | +6% | 38 days |
San Francisco | $1.38M | -6% | +3.5% | 39 days |
Santa Clara | $1.75M | -3% | +16% | 27 days |
Contra Costa | $790K | -1% | +1% | 39 days |
Alameda | $1.1M | -3.5% | -2.4% | 36 days |
Sale Price | Average Days On Market | Percentage of Listings Sold Over Asking |
$800K-$1.3M | 68 | 50 |
$1.3M-$1.8M | 59 | 54 |
$1.8M-$2.3M | 52 | 51 |
$2.3M-$2.8M | 63 | 47 |
$2.8M-$3.3M | 58 | 35 |
$3.3M-$3.8M | 88 | 34 |
$3.8M-$4.3M | 46 | 47 |
$4.3M-$4.8M | 62 | 40 |
Table of Contents:
SF Bay Area Real Estate Price Trends
KPeterson.realty Proprietary Heat Maps
Track how prices are trending month-over-month and year-over-year.
Pricing Month-over-Month (December to January)
The median sale price declined 2.5% from December 2024 to January 2025.
These month-over-month declines align with typical seasonal patterns in the housing market, where prices often dip during the winter months before rising in the spring and summer.
Pricing Year-over-Year (January 2024 to January 2025)
Prices across counties rose between 2.1% (SF) and 15.6% (Santa Clara) for an average of 7.3% year-over-year.
This shows that homes are still getting more expensive over time.
List-to-Sale Price Ratio
The data from January 2025 indicates that homes in these counties were sold at prices near or slightly under their listing prices, implying a more balanced market compared to December 2024.
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.
Month-over-Month Inventory Levels
Inventory levels across the Bay Area decreased compared to the previous month, with a notable reduction in San Francisco. In fact, total inventory in San Francisco fell by 50.9% from December 2024 to January 2025, hitting a record low. This trend was observed across other counties as well, with sales continuing to outpace new listings, leading to a further reduction in available homes.
Year-over-Year Inventory Levels
Inventory levels for the third year in a row hit historic lows.
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 3,000 active listings.
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
In January, single family homes were at 2.3 while condos were at 4.1 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.
January saw the highest Days on Market in the last 12 months while the Sales Price to List Price Ratio dropped to the lowest for single family homes at 103.5% and condos bounced back up to 99% of asking.
Sales Price to List Price Ratio peaked in April 2024 for single family homes and condos while Days on Market bottomed in May at 16 days for single family homes and 32 days for condos.
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.
Macroeconomics
Mortgage Rates
Month-over-Month Change
Rates peaked around 7.2% in early January after rising through the entire month of December.
Driving Factors: The Federal Reserves paused rate cuts, a cautious approach to elevated inflation and mixed reports (e.g. strong labor markets).
Year-over-Year Change
Rates increased from 6.2% (Jan 2024) to 7.02% (Jan 2025), indicating a 0.82% year-over-year increase.
10-Year Treasury
Yield Decrease: The decline in the 10-year U.S. Treasury yield in January 2025 contributed to a slight decrease in mortgage rates.
Market Dynamics: The Federal Reserve maintained the federal funds rate at 4.3%, pausing its recent rate cuts to assess economic conditions. This cautious stance contributed to the stabilization of long-term yields.
Economic Indicators: Easing inflation pressures, as indicated by recent data, contributed to the decline in yields.
Labor Market Data: Positive labor market data also played a role in the decrease in yields. While the U.S. labor market showed strength in January 2025, indicators point to a gradual cooling, warranting close monitoring in the coming months.
Investor Sentiment: Delays in U.S. tariff hikes reduced market uncertainties, leading to a decrease in yields.
Stock Market (Performance in January 2025)
S&P 500 Performance: The S&P 500 demonstrated notable strength, achieving a monthly gain of 2.7% and a record high on January 23, 2025. Ten out of eleven sectors posted positive returns.
Nasdaq Composite: The emergence of China's DeepSeek AI model introduced heightened competition in the artificial intelligence sector, impacting U.S. tech giants. The Magnificent Seven collectively contributed over 50% of the S&P 500's gains in 2024, with an average increase of 63%. Yahoo Finance
Market Drivers: Announcements of new U.S. tariffs on imports from Canada, Mexico, and China introduced market uncertainties, affecting investor sentiment while mixed earnings results from major technology companies contributed to market volatility.
Investor Sentiment: Despite challenges such as Federal Reserve policies and tariff concerns, investor confidence remained robust, leading to strong investment inflows, particularly in the technology sector.
FED (Federal Reserve)
Interest Rate Unchanged: The FED decided to hold rates steady in January, after three consecutive rate cuts totaling 100 basis points in late 2024. Fed officials emphasized a cautious approach, indicating no immediate plans for further rate adjustments.
Inflation Concerns: The Federal Reserve Bank of Boston released a report analyzing the potential inflationary effects of proposed tariffs, estimating an increase in inflationary pressures by up to 0.8 percentage points. This analysis underscored the Fed's cautious stance on monetary policy amid external economic uncertainties.
Balance Sheet Developments: The Federal Reserve continued its balance sheet reduction strategy, allowing holdings of Treasury securities and agency mortgage-backed securities to mature without reinvestment, as part of its ongoing efforts to normalize monetary policy. Since the initiation of quantitative tightening (QT) in 2022, the Fed's balance sheet has contracted by approximately $2.15 trillion, bringing the total assets down to around $6.81 trillion, the lowest level since May 2020. Analysts anticipate that the Fed may continue QT into late 2025, depending on economic and financial conditions.
Inflation
In January 2025, the U.S. inflation rate, as measured by the Personal Consumption Expenditures (PCE) Price Index, increased by 2.6% year-over-year, marking the largest gain in seven months. reuters.com
The Consumer Price Index (CPI) data for January 2025 will be released on February 12, 2025. For December 2024, the overall inflation rate was 2.9% year-over-year, with the core inflation rate (excluding food and energy) at 3.2%, well above the FED's 2% mandate.
Analysts anticipate that inflation will continue to moderate, potentially reaching the Federal Reserve's target rate of 2% by 2027.
Employment
Strong US Labor Market: The stronger-than-expected job growth and declining unemployment rate suggest a robust labor market, which can lead to higher demand for housing and, consequently, higher mortgage rates as lenders adjust to the increasing demand for loans. As of January 2025, the Fed's policy decisions continue to influence rates, and a tight labor market could contribute to the Fed holding interest rates steady or tightening them further to keep inflation in check.
AI Talent Demand: The Bay Area continues to lead in artificial intelligence (AI) talent, housing approximately 61,497 AI professionals, the largest concentration in the U.S. This demand has driven tech wages in the region to be 17% higher than the national average, with software developers at tech companies seeing a 12% year-over-year wage increase. The tech job market on the whole has transformed from a growth-driven to a revenue-focused industry. Individuals previously finding opportunities through recruitment and referrals now face challenges in securing positions. CBRE
Shift in Job Postings: Since February 2020, postings for software development jobs have declined by over 30%, with significant layoffs continuing into 2024. Companies have shifted their strategies by cutting non-revenue projects and focusing on essential roles such as AI, while entry-level positions have diminished. WSJ
Office Space Dynamics: Despite the AI boom, office vacancy rates in San Francisco have reached historic highs, with more than a third of office spaces unoccupied. Some Bay Area tech companies are enforcing stricter in-office requirements, others maintain hybrid or flexible work models, reflecting a spectrum of strategies to balance business objectives with employee preferences in the evolving work landscape. There has been a decline in the number of individuals working exclusively from home since 2021, indicating a shift towards hybrid models.
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