Low Supply, Low Demand: Attack of the Vanishing Listings & Invisible Buyers.
For 25 years, single-family listings in San Mateo and Santa Clara Counties have been vanishing like someone whose car broke down in a deserted country road late at night. Around the turn of the century, right around the time that Y2K destroyed the planet, about 30,000 single-family homes would be listed for sale each year in San Mateo and Santa Clara Counties combined (~40,000 if you also invited condos and townhomes to the costume party). Today, we’re lucky to see about half that volume. Back in the early 2000s, that larger supply of homes often produced a spooky outcome: only 50–60% of listings actually sold on the first try (some returned as relists, the real-estate equivalent of zombies). Today the ending is less grisly, roughly 75–85% of new listings make it across the finish line on the first try. These numbers though are a bit like a medium looking into a crystal ball; the accuracy is questionable, but the trend is correct. Over the years rules have changed regarding off-MLS sales, so we don’t always have an accurate count regarding the real number of homes listed and sold each year.
A decade into the 2,000s and according to the MLS listings dropped below 20,000/year. Sellers continued to vanish, you’d see posters all over town asking if you’d seen them? Some people suspected aliens while others blamed it on cannibals. Their homes and possessions remained behind, but the sellers were simply gone! Then 2023 showed up wearing a hockey mask and the slaughter of sellers manifested into complete devastation. As interest rates rose like the undead, home owners clutched their ultra-low mortgage rates like a cross in the presence of a vampire and they refused to transform from a home owner into a seller as prophecy had foretold. Result: only a horrifying 12,600 single-family homes were listed for sale in 2023. Looking ahead, 2025 appears on track to finish a bit stronger with a little over 15,000 single-family listings. Like in a horror movie when you’ve been hiding for a long time and finally decide you just have to make a run for it, you can’t hide forever; many buyers and sellers have accepted that 6%+ mortgage rates may linger much longer, so they accept their fate and finally move on with either buying or selling a home.
Also haunting the halls is the IRS, especially for seniors. Many seniors have owned their homes for close to eternity and the IRS like a shark will bite off a large chunk out of their equity should these seniors ever dip their toes into the home selling pool. There’s talk in the halls on congress about eliminating capital-gains taxes on primary residences. If that potion ever gets brewed, it could unlock a large amount inventory as seniors feel like it’s safe to go back into the water again. Don’t forget: Boomers now hold nearly half of the nation’s real estate wealth.
Home Prices Flat, Stocks Up: Stocks fly like a bat out of hell while home prices flat line.
Despite the thin home supply, home prices in San Mateo and Santa Clara counties have flat lined at around $1,200/SqFt of living space for the last couple of years despite the stock market bringing out the heart shock paddles—clear! Meanwhile the Dow Jones Industrial Index has been doing the Monster Mash, up ~20% over the same period. Historically, local home prices, like a creepy stalker, chased the broader stock market, but right now they’ve split up like teenagers in a haunted house; terrible idea, but here we are.
Why the disconnect between stocks and home prices? Higher mortgage rates have drained purchasing power faster than a vampire at happy hour while tech valuations levitate to all time highs. Even buyers that have benefited from the rising stock market are nervously checking the basement worried about job security due to the “tariff roller coaster,” and whether AI will replace them with a cheerful robot that never needs coffee or bathroom breaks. So the villagers are hesitating on making giant, life-altering purchases (like a house) and instead make smaller ones like more torches and pitch forks in case the big bad monster shows up.
Meantime, demand for good haunted homes still exists, but it’s more cautious. The bidding frenzies of 15–20 offers have mostly retreated to legend; now we’re seeing 3–5 offers, if that. Translation: today’s buyer pool is full of scaredy cats, wearing garlic and counting pennies.
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