The San Carlos Real Estate Q1 2025 Recap

A Rebound Amidst Economic Headwinds?

The first quarter of 2025 is officially in the books, and what a three months it has been. It's hard to believe that at the beginning of this quarter, we were still in the midst of a change in the administration, and the Dow Jones Industrial Average was trading at 42,544 (January 2 close).

Today, the DJIA closed at 38,170, or a drop of 10.3% in just 3.5 months. Ouch.

But the pain cuts deeper for than that for many home buyers. Why? Because they have a significant portion of their equity not in the DJIA or S&P 500 Indices, but usually in the stock of the company that they work for. In this area, that means primarily tech stocks.

And how have those stocks done so far this year?

• Google: -22.1%
• Meta: – 12%
• Nvidia: – 25%
• Amazon: -21%
• Apple: -20%

I could keep going, but you get the idea. And unless you're holding all of your money in cash or gold, your portfolio got a similar trimming so far this year, and it was probably far more than the 10.3% drop in the DJIA.

So when you combine the shelling of the stock market with the fact that mortgage interest rates have barely budged since the beginning of the year, it would be easy to understand why home buyers would head for the hills… and I'm not referring to view homes, either.

But that's not what's happening. At least not in the magnitude that you might expect.

More Inventory

Inventory, in the form of new home listings, is one of the primary bellwethers for understanding how a market is going to perform. The other is closed sales. If we have a low number of listings (like we have experienced the past two years) the market is going to under-perform regardless of how fast those homes sell, simply because fewer homes are being sold. Subsequently, if you have a market with a lot of inventory and not a lot of those homes sell, that's not a recipe for a robust year, either.

So let's take a look at the listing performance for single-family residences in San Carlos in Q1 compared to the same period for the past 5 years:

The number of new listings in Q1 of this year jumped by over 26% from Q1 of last year, which finally reversed a four-year trend of declining listings. But the bar in 2023 and 2024 was pretty low, not only in San Carlos, but all across the nation. As I have mentioned in previous posts, those two years marked the lowest number of home sales in the United States since 1995 — when there were 30 million fewer people living here.

On the surface, it's a bit contradictory to see such a big jump in listings, while the number of closed sales remained essentially flat to last year. That doesn't mean that homes aren't selling. The reason for this disparity is that nearly half (30) of the 72 new listings in Q1 of 2025 hit the market in the month of March, which means that most of those homes are either pending sale or are still on the market. But you should expect a significant uptick in sold units when I run these numbers again after the end of Q2. The number of homes currently for sale in San Carlos as I write this post is only 21, which is well below the average inventory for the peak of the spring market. Homes are definitely selling, as you will see below.

Prices on the Rise

It would be very logical to assume that with all of the aforementioned economic challenges facing the local real estate market, home price would take a hit. After all, buyers effectively have less money for their down payments, and the cost of borrowing remains stubbornly high.

But that's not what's happening. The chart below shows the average and median sales price for homes sold in San Carlos in the first quarter:

The average price of a San Carlos home in the first quarter was nearly $3,000,000. Just let that sink in for a moment. This is 17% jump from just last year, and is the highest average price for a first quarter on record.

The median price of $2,800,000 also set a record and easily exceeded the first quarter of 2022, which was widely regarded as the peak in the recent market before the rapid rise in interest rates in the latter half of 2022 pulled the market down.

Another metric I like to use to analyze price trends is the average price per square foot (PPSF). As you might expect from the chart above, the average PPSF took a rocket ride upward in Q1 as well:

The average PPSF for a San Carlos home hit an all-time high in Q1 at $1,500/sq foot, which is an astonishing jump of 18% from last year, and even 4% higher than the previous record set in 2022.

So no matter how you slice the data, the price of housing in San Carlos continues to climb – regardless of what's happening in the economy.

Total Revenue

Since revenue is the result of closed sales, and the closed sales in Q1 have yet to reflect the uptick in new listings, it would make sense that the total revenue for residential sales would also not reflect the same uptick. The chart below is the revenue from all residential sales in San Carlos — single-family homes, condos, and townhomes.

Even though there were more total units sold in Q1 of 2024 (59) than Q1 of 2025 (52), the overall revenue was slightly higher in the most recent quarter — thanks to the drastic increase in home prices. This chart should look very different for 2025 YTD when I update it next quarter.

What Lies Ahead?

Looking ahead to Q2, more of the same economic volatility appears to be on order: Tariffs on, tariffs off….stock market up, stock market down. So far, the real estate market has persevered through these distractions, but it makes me wonder whether the constant whipsaw effect of these policies is going to cause some fatigue in our local market. After all, consumer confidence and home sales go hand in hand. If the former is down, the latter will follow suit, and right now consumer confidence is heading toward a multi-year low. Only time will tell.

I'll refresh these charts again at the end of Q2. In the meantime, keep checking in on the Monday “Real Estate Week in Review” series on this site if you're interested in seeing the weekly trends in the San Carlos real estate market.

Comments or questions? Feel free to reach out, or leave a comment below!