The San Carlos Real Estate Market Update: Q3’26

The rebound continues…

It has been four years since the Federal Reserve spoiled that free-money party we were all partaking in by initiating eleven separate rate hikes over the subsequent 16 months. That had the desired effect of slowing down inflation, but as I've analyzed numerous times on the blog, it cratered what had been a red-hot real estate market.

Because of this, the San Carlos residential real estate market experienced a significant decline in all of the meaningful metrics in 2023 and 2024, and the market struggled to regain its footing while dealing with the shock of the highest interest rates seen in decades.

2024 seemed to mark the bottom of this most recent slide, since the San Carlos real estate market enjoyed a noticeable rebound in all of the aforementioned metrics in 2025. The only question at that point in time was whether that bounce-back was a promising trend or just a blip.

From the data below for the first three quarters of 2026, it's apparent that the rebound is alive and well.

Revenue Surges

The first chart I always like to pull is the total sales revenue for San Carlos. This particular chart is the only one that includes condos and townhouses. The remainder of the charts pertain only to single-family residences.

The total sales revenue for the first nine months of 2026 leaped well above the same period in 2025 by nearly 19%. In fact, the nearly $650M in sales registered so far this year is the second-highest on record, surpassed only by the booming, free-money market of 2021.

In case you were wondering, condos and townhomes accounted for only 9% of the total market in San Carlos for the first nine months, which is actually a bit low by historical standards — they usually account for 11-13% of the total. It's also why I exclude that segment of the market in my data analysis, because it's almost inconsequential.

The other 91% of the market, single-family residences, is enjoying a strong rebound, even despite stubbornly high interest rates. The chart below shows the average and median sales prices for the first nine months, compared to the same period over the previous five years.

The $2,910,808 average sales price and the $2,800,000 median sales price were not only both about 5% above their respective figures in 2025, but they were both also all-time record-high figures, just edging out the previous high-water marks in 2022.

The other measurement that I use to assess the relative health of home prices, price-per-square-foot, remained at near-record high levels for the first three quarters of the year:

The $1,428/square foot average in 2026 is the second highest on record for this period, just slightly below the record high set in 2022.

More Homes Are Selling

The surge in home prices was only part of the reason why sales revenue jumped by 15% from just last year. Take a look at the chart below, which compares the number of new listings and closed sales for the period:

There are two interesting things that pop out of this chart. First, the number of new listings to hit the market so far in 2026 is not a remarkable number. It's just about even with last year, and it's definitely below the number of listings in 2022 and 2023. That in itself is not a ringing endorsement that we're having a banner year.

But what IS telltale is the other bar — closed sales. Even though the number of listings is flat compared to last year, the number of those listings that actually sold is up a solid 15% and is the highest number of closed sales for the first three quarters since the same period in 2021.

What does this tell us? Look at the circled areas on the graph, and focus on the gap between the number of new listings and closed sales. In 2026, the gap is much smaller than in 2022 and 2023. If you look from the perspective of ratios, the ratio of closed sales to new listings in those two years was only 0.71, while in 2026 it dramatically improved to 0.85.

In other words, in 2026, buyers are actually buying, and listings are selling, not languishing and being re-listed like they were a few years ago.

This is a good indication that even despite the economic challenges with interest rates, the San Carlos market performed well in the first 3/4 of 2026.

What Lies Ahead?

The San Carlos real estate market so far in 2026 is so significantly outperforming the numbers registered in 2025 that it would almost be impossible for the final numbers at the end of the year to not show continued annual growth, thus keeping the rebound alive, at least for this year.

Even the number of pending home sales, which is a good predictor of future revenue, is running at one of the highest levels for this period on record. There's still another $23M of listings that are pending sale in San Carlos that will close before the end of the year.

But there are significant challenges on the horizon not only for the San Carlos real estate market, but for the entire nationwide market. As of this morning, home mortgage interest rates hit the highest level in three years, and most experts predict those rates will continue to rise.

Since only about 15% of homes in San Carlos are purchased entirely with cash, by definition, the San Carlos market is a rate-sensitive one, just like many other communities on the Peninsula. We've already started to feel the impact of higher rates, as home buyers are pulling back on their offer prices, if they even decide to offer at all. This resistance will only increase if rates continue to ratchet up.

On the other hand, the wealth being generated by the AI boom is definitely being felt all along the Peninsula as a new crop of millionaires are joining the mix of first-time home buyers.

It makes for very interesting times, and I look forward to running these numbers again at the end of the year!