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The Midpeninsula’s residential real estate market should remain mostly above the fray this spring despite economic uncertainties, a roller coaster stock market and relatively high interest rates.
That is the cautiously optimistic assessment, at least, from the region’s Realtors. They even predict an incremental improvement in the area’s famous lack of housing inventory during the upcoming season.
“There are lots of buyers, and they are a strong and aggressive group,” said Leslie Woods, a Realtor based in the Palo Alto office of Christie’s International Real Estate Sereno. “I do feel they are not afraid of the (current) interest rates.”
In late March, 30-year mortgage interest rates were nearing the 7% mark, while 15-year rates were below 6%.
There are lots of buyers, and they are a strong and aggressive group.
Leslie Woods, Realtor at Christie’s International Real Estate Sereno
Woods said house hunters who jump into the market and buy this spring will be ahead of the game, and have the option of refinancing if interest rates drop further.
She anticipates spring on the Midpeninsula to be a busy market with plenty of well-qualified buyers jockeying for properties. Even homes in more congested, densely developed neighborhoods are drawing up to a dozen offers from eager buyers, she added.
“I have quite a few listings coming onto the market,” Woods said. “We have a very active spring market. The contractors and stagers are booking up fast.”
Also forecasting a modest rise in inventory this spring is Elyse Barca, a Realtor in the Menlo Park office of Compass real estate. She has observed a busy schedule for contractors doing home improvement projects and stagers choreographing the process of getting properties ready for the market.
Multiple offers are common on desirable turnkey properties in the region, she said, and are fetching prices ranging from 5% up to 13% over list price.
The median price in March for a home in Palo Alto was nearly $3.3 million, with a median sale price of about $3.96 million.
“People have gotten accustomed to the interest rates,” Barca said of the Midpeninsula’s prospective buyers, who she says are plentiful this spring. “Demand for housing definitely still outpaces supply.”
Insurance crisis fuels cash-only deals
One sizable fly in the ointment, however, is the price and availability of homeowners‘ insurance, especially in local communities more susceptible to higher wildfire risks, she said.
Insurance was already a major issue statewide — given such high-profile, damaging fires as the 2017 Tubbs Fire in Sonoma County and 2018 Camp Fire in Butte County — but it has been hugely exacerbated by massive damage caused in January by the Eaton and Pacific Palisades wildfires in Los Angeles County, which destroyed more than 18,000 structures.
A cash offer can make all the difference in the world these days.
Elyse Barca, Realtor at Compass real estate
Locally, areas with heightened wildfire risk includes more rural and hilly communities such as Woodside, Portola Valley, Los Altos Hills and parts of Redwood City.
“The cost and availability of homeowners insurance has become a huge issue,” Barca said. “For some, it will be extremely difficult to even get insurance.”
Mortgage companies require homeowners‘ insurance.
“A cash offer can make all the difference in the world these days,” she said.
One of the nation’s biggest insurers, State Farm, has already received provisional approval from state Insurance Commissioner Ricardo Lara to raise homeowners’ insurance rates by 22% statewide.
Lara also is requiring the company to stop canceling or not renewing existing policies statewide through Dec. 31, and that parent company State Farm Mutual bolster its finances in California with an infusion of $500 million.
More bedrooms among ‘in-demand’ amenities
Along with the ability to obtain and afford insurance for their future residences, prospective buyers on the Midpeninsula are holding onto a few priorities that grew out of the pandemic. Outdoor spaces and amenities are still valued, though large properties are not as eagerly sought after, according to local Realtors. And, they say, using online resources to scout suitable properties and view them in three-dimensional online tours before visiting in person is a trend that’s here to stay.
Woods said buyers today are less concerned with overall lot size than additional space inside the house.
“Buyers today are looking for another bedroom or bathroom for additional family members,” she said.
Also in demand this spring are properties with Accessory Dwelling Units, according to both Barca and Woods. They can be compact, standalone structures, often in backyards, with one or two bathrooms, or converted space in former garages.
Market sees departure from seasonal trends
Perhaps another shift in the homebuying market is a departure from seasonal trends. Woods said she has noticed more activity in recent years during the traditionally quiet winter holidays and pre-Super Bowl period during January and early February.
“The market was busy through December,” said Brian Chancellor, Realtor in the Palo Alto office of Christie’s International Real Estate Sereno. “It has been busy and robust, and (price) appreciation has continued.”
Even with all the market volatility, folks are jumping into the market.
Brian Chancellor, Realtor at Christie’s International Real Estate Sereno
While the area’s inventory remains characteristically low, he said new listings have hit the market in early spring with contractors and home stagers booked up solid.
Chancellor said stock market fluctuations will have an impact on Midpeninsula buyers, but affluent buyers seeking high-end properties are already active, pitching multiple offers this spring.
“Even with all the market volatility, folks are jumping into the market,” he said.
On the other end of the price spectrum, interest in condominiums and townhouses has been resurgent since last year after suffering during the pandemic, he said.
Chancellor concurs with Barca and Woods that interest in ADUs and multi-generational housing is a strong trend in 2025.
Entry-level housing considered ‘hotspot’
But, so far this spring, Realtor Jasmine Lee is not yet convinced that that it will be the robust, vigorous market other Realtors are predicting.
The Midpeninsula’s high prices make some prospective buyers who work in the area think twice before becoming homeowners, she said.
We’re even seeing multiple offers for properties on busy streets.
Jasmine Lee, Realtor at Coldwell Banker Realty
“I don’t see buyers being as aggressive as in past years,” said Lee, a Realtor in the Menlo Park office of Coldwell Banker Realty. “I had one recent client who would have had a mortgage payment more than twice the amount of his monthly rent.”
Lee noted in late March, more single-family homes were sitting on the market than in recent years — just over 1,000 in Santa Clara County alone, with about 600 under contract; compared to 720 on the market at the same time last year, with 561 under contract.
Though Lee says the region may experience a “market correction,” she contends there is cause for optimism in the near term, as well.
She anticipates that entry-level housing — ranging from $1.5 million to $3 million in price locally, depending on the community — will be a busy market segment this spring. That even includes properties in more challenging locations, she said,
“We’re even seeing multiple offers for properties on busy streets,” Lee said.
