The San Carlos 2024 Real Estate Year in Review.

The Rebound That Didn't Happen.

Just about this time last year, I sat down to write a recap of the San Carlos real estate market for 2023 that's very similar to this one. In that report, I was lamenting about the 11 straight times the Federal Reserve hiked interest rates in just 16 short months, and the devastating effect these actions had on the residential real estate market in 2023.

While the real estate market in every city in the Bay Area essentially took it on the chin in 2023, there was a widespread belief that 2024 would be a rebound year from 2023. Experts predicted that inflation would start to subside and home mortgage interest rates would gradually decrease throughout the year and would be as low as 5.75% by the end of 2024.

As we now know, inflation did indeed drop but home mortgage rates did not follow suit and remained between 6.5% – 7.0% for much of the year. In fact, this article in Yahoo Finance states that home mortgage rates at the end of 2024 were the same as at the beginning of 2024. Nevertheless, virtually every Peninsula city did experience a rebound in their respective markets from the depths of 2023, which many of us pegged as the bottom of the current market slide. There was simply too much pent-up demand for housing, and buyers finally shrugged off the sticker shock of higher mortgage interest rates. Even sellers who were desperately holding on to their sub-3% mortgages realized that rates weren't coming down to that range anytime soon (if ever), and they started putting homes back on the market.

Well, San Carlos apparently didn't get the memo that 2024 was to be a bounce-back year. As you'll see from the data below, while other cities climbed out of their respective cellars, the real estate market in San Carlos hit new lows.

Another Decline in Revenue.

The chart below shows the total sales revenue for all residential units sold in San Carlos over the past 5 years, and includes single-family homes, condos, and townhomes:

The total sales volume of $609M for 2024 was lowest in San Carlos in the past seven years.

But as I mentioned above, every other city on the Peninsula actually did recover from the stumble of 2023 and posted modest gains in revenue. The chart below compares the total revenue in 2023 versus 2024 for some of San Carlos' closest neighbors.

This uptick in revenue was not limited to just these 5 cities.

This table shows the % change in total sales revenue for 2024 for a dozen neighboring cities along the Peninsula compared to 2023.

City	2024 Total Revenue	% Change from 2023
Belmont	$488,303,542	+53.3%
Los Altos	$1,390,843,294	+37.9%
Palo Alto	$1,776,837,583	+28.4%
Sunnyvale	$1,694,759,505	+22.9%
Mountain View	$1,069,048,803	+22.3%
San Mateo	$1,434,317,080	+20.8%
Menlo Park	$1,209,164,236	+15.3%
San Bruno	$306,329,233	+13.1%
Half Moon Bay	$191,597,600	+11.3%
Burlingame	$541,953,776	+11.1%
Pacifica	$333,491,535	+10.1%
Redwood City	$1,049,200,629	+6.1%
San Carlos	$608,761,203	-8.6%

San Carlos was the only city on the Peninsula that saw a decrease in sales revenue from 2023 to 2024. That is simply mind-blowing when you consider that San Carlos has long been a preferred destination for many home buyers.

So why did the total sales revenue in San Carlos decline again in 2024? It was the same reason as in 2023…

Fewer Listings, Fewer Sales.

If you read this blog with any regularity, then you know this is beginning to sound like a broken record. But for the second straight year, the number of single-family home listings and closed sales in San Carlos has absolutely plummeted. Just take a peek at the numbers below:

It's pretty simple to connect these dots: The overall revenue is down because the number of closed sales is down, and the number of closed sales is down because fewer homes were put up for sale. It's as straightforward as that. As you'll see below, the decline in revenue has nothing to do with home prices. On the contrary, the shortage of inventory has kept home prices at near all-time highs in San Carlos.

No, the sole reason for the plunge in sales revenue is simply due to the lack of new listings.

It's understandable why San Carlos, and other communities along the Peninsula, saw a major pullback in listings in 2023. They are:

• Interest Rates: Barring a situation where someone absolutely had to sell their home, it was unlikely that a homeowner would forgo a 3% mortgage for a 7.5% mortgage just to get a larger home in a better neighborhood.
• Capital Gains Tax: This is the doozy that hits retiring Baby Boomers far more than interest rates. After all, many older buyers either have a very small mortgage or none at all, so the interest rate difference doesn't impact them since they are trading cash for cash. But the ghastly thought of paying hundreds of thousands of dollars in capital gains taxes is forcing many families to retain their properties rather than sell them.
• Property Tax Adjustment. Unless you are over 55 and thus protected by Prop 19, you're not protected from the shocking increase in your property taxes when if you decide move and purchase a new home.

But why did San Carlos not see an increase in both listings and revenue in 2024, when every other community on the Peninsula did? I honestly don't have an answer for that one.

What to Expect in 2025.

This is always a tough one to predict. The housing market is impacted by so many factors, including the stock market, home mortgage rates, consumer confidence, the job market.. just to name a few. And when you add a complete change of the government administration to the mix, the future becomes even more murky. But I think a few things will happen in 2025:

• Home Sales: In 2023, 4.1M single-family homes sold across the United States, which was the lowest level since 1995 – almost 30 years. The final numbers for 2024 won't be in for several months, but all projections show it being flat to 2023, making it another down year. I believe the factors that have been keeping both buyers and sellers on the sidelines for the past two years will subside somewhat in 2025, and we should see a slight rebound in listings, sales, and revenue in 2025. Most experts are predicting an increase in listings of 10%-15%, which would bump the nationwide total up to about 4.5M homes — a healthy increase, but still below the normal run rate of 5M or more homes. San Carlos should see about the same increase in listings and sales in 2025. I just can't fathom a third straight subpar year of activity when there is still so much demand for housing.
• Interest Rates: If you're waiting for rates to drop back to close to the pandemic-era levels before you make a move, you're going to be waiting a long time — if not forever. It's highly unlikely that we'll see 3% interest rates again in our lifetime, barring another pandemic or a complete economic meltdown — neither of which I would recommend. Most experts are predicting that rates will oscillate between 5.8% and 6.2% in 2025. Many buyers and sellers who were on the sidelines are becoming accustomed to this being the “new norm” and they will get back into the market in 2025.
• Home Prices: The listing drought that we're experiencing in San Carlos for the past two years has kept inventory low and, consequently, home prices high. Even if San Carlos experiences a 10%-15% increase in listings in 2025, it's not going to be enough to level the imbalance between buyers and sellers, so prices should remain elevated throughout this year.

For buyers, this isn't great news because high prices and high interest rates take a huge bite out the affordability factor, and we haven't even mentioned home insurance and property taxes. But at least it clarifies some of the uncertainty of the past two years. I believe we have a better understanding about the market trajectory than we've had in the past 2-3 years.

For sellers, low inventory and high prices create a near perfect storm for selling in 2025. Even with an increase in listings, competition will still be lower than normal. If it weren't for interest rates being stuck where they are, 2025 would be the perfect storm for sellers of homes in San Carlos.

Got questions? I study the statistics of the San Carlos real estate market more closely than probably any other Realtor. Feel free to reach out with any questions you might have, or post your thoughts in the comment section below. I hope you enjoyed this report!