The San Carlos Real Estate 2025 Year in Review

2025 is now in the books, and what an E-ticket ride it was. There were several events that occurred last year that had a profoundly positive or negative impact on our local real estate market.

First, we almost always experience a brief pause in the market every four years when there's a Presidential election. The lull itself actually starts in the months leading up to the election (and carries over until after the inauguration in January). This disruption is even more pronounced when there's a wholesale change in the party that will be assuming power, because that usually means there are much more dramatic policy changes in store.

That was definitely the case in 2025.

The most negative impact on the real estate market nationwide was the widespread and aggressive implementation of tariffs, which started in earnest on April 2. The immediate result of this policy was a staggering drop in the stock market, with the Dow tumbling 1,700 points in the blink of an eye and the S&P 500 losing $5 trillion in market value in just 48 hours.

For a real estate market that relies so heavily on a healthy stock market, this massive downward shift in wealth paralyzed our spring real estate market — a period when more homes are traditionally put under contract than at any other point of the year. Luckily, the market recovered most of its losses in about 4-6 weeks, but the constant threat of more tariffs kept consumer confidence on edge and that showed up in the numbers.

Across San Mateo County, the median price of a single-family home dropped by nearly 6% between April and July, and the number of homes that sold dropped by 4%, so the pain was very real.

The job market also created some speed bumps for home sales. The lightning-fast shift to Artificial Intelligence forced many tech companies to rapidly retool their respective workforces to compete, and anytime the tech market shifts that quickly, there will be turmoil in the ranks. Some companies (Amazon, Intel, and Microsoft) were literally shedding thousands of employees in legacy divisions, while at the same time adding thousands of jobs in their AI divisions. Anytime there's that much uncertainty in the job market, buyers tend to retreat from the market.

On the positive side, home mortgage interest rates slowly inched downward in 2025. While they did not achieve the “mid 5%” range that the optimistic experts predicted, the overall stability of rates was enough to get buyers off the sidelines.

Below, I will take a deep dive into the important metrics for the San Carlos real estate market in 2025 by first looking at the top-line revenue for all residential sales, and then drilling down into factors that impact the revenue numbers — the number of homes sold, and the prices of those homes.

Total Sales Volume Up.

Despite the ominous introduction to this post, the total sales volume for all San Carlos residential real estate, including condos and single-family homes, actually increased in 2025 compared to 2024. On one hand, that's surprisingly good news. But considering that 2024 registered the lowest sales revenue in seven years, the bar was low to begin with.

This chart shows the total sales revenue in 2025, compared to the previous four years. The total sales volume increased by nearly 18%, and is about on par with where it finished in 2022.

In fact, even though 2025 was not considered to be a banner year since it is coming on the heels of three years of market malaise, the $756M in total revenue is the third highest on record in San Carlos, surpassed only by the surge that happened right after the pandemic.

How is that happening? As we discussed in previous reviews, revenue is simply a function of the price of housing multiplied by the number of units sold. If both of those metrics are up, then you have solid revenue growth — and that's exactly what happened in 2025.

Prices Hit All-Time High.

If you were shopping for a home in San Carlos last year, then you were painfully aware that bargains were very few and far between. That's because the average sales price of $2,746,167 and the median sales price of $2,645,000 for a single-family home were the highest ever recorded in San Carlos for a full year. That's right — even higher than 2022, the last year that ultra-low home mortgage interest rates fueled the market.

The average and median sales prices jumped 7% and 10%, respectively, over just 2024, and nearly 15% in just two years. It's probably no coincidence that “numb” makes up the first four letters of the word numbers, because all of these huge leaps and bounds in home pricing become simply numbing after a while.

To put this numbing into perspective, the chart below shows the median sales price of a single-family home in San Carlos every year since 2001:

The median price of a single-family home in San Carlos in 2001 was $659,000, which means that the price appreciation over 25 years is 301%. That's not a bad investment.

Another metric I often use to gauge price appreciation is the average price per square foot (PPSF). This graph tends to mirror the direction of the average and median sales price graphs, and this year is no different.

The figure of $1,401/sf is also the highest recorded for a single-family home in San Carlos.

Unit Sales Increase.

If you had to pick the best news in all of the data from this report, it's probably the chart below. The number of new listings and closed sales both increased substantially over 2024, thus marking the end of a painful three-year skid that saw the lowest number of home sales in several decades.

The number of new single-family homes listed in 2025 jumped by 24% over 2024. It's possible that a fraction of these “new” listings were ones that were canceled and then relisted again because they didn't sell the first time around. But even taking these into account, there was still solid double-digit growth in the number of homes that were put on the market.

Closed sales rose by 19% from 2024, which is also very encouraging. While these figures are nowhere near historical averages, they are an indication that we're slowly climbing back into a more active and balanced real estate market.

What to Expect in 2026

Predicting what is going to happen in the new year is always one of the most difficult things to do, since there are so many things that can happen unexpectedly, especially with an extremely active administration, and the fact that we're back in another election cycle this coming fall.

I believe that the behavior that we witnessed in 2025 was largely the byproduct of stability. The previous two years were marred by uncertainty in the employment market, and an expectation that interest rates were going to significantly drop again. What we saw in 2025 was an attitude of resignation — “it is what it is” — and those buyers and sellers that were waiting on the sidelines for something that was clearly not going to happen finally climbed back on board.

Looking ahead, here's my take on a few key issues that will define the 2026 real estate market:

• Interest Rates. This will likely be the #1 topic in the first half of the year, because the current Fed Chairman's term expires in May, and he will almost certainly be replaced by someone more in line with the administration's wishes (lower interest rates). It's important to remember that home mortgage interest rates are NOT directly tied to the Fed rates, but they still tend to mirror each other. Other things like the inflation rate and the 10-year bond performance have as much of an impact on home mortgage rates as does the Fed rate. That being said, I still believe we will see a modest improvement in interest rates this coming year. We likely will not see another period of 3% home mortgage rates in our lifetime, but it's quite possible to see the high 5's by this time next year, and that will bring more buyers to the market.
• Home Sales: More of the same attitude that drove the increase in sales in 2025 will continue this year. Sellers are coming to grips with the fact that rates aren't going to change appreciably over the next few years, so those who have been holding out will decide to sell in 2026. In fact, look for busier-than-normal listing activity in the month of January. Sellers are starting to catch on that listing earlier in the new year means less competition and therefore better sales prices. Also, there are a number of homes that did not sell in 2025 that will be re-listed as soon as the holidays are over. So overall, I expect a modest 5% increase in the number of homes sold in San Carlos this year.
• Home Prices: It's impossible to predict if another record will be set this year for the price of a single-family home in San Carlos, but it's safe to assume that prices will remain near all-time highs. Even if we experience a substantial increase in the number of new listings this year, it won't be nearly enough to offset the decades-old imbalance of too many buyers looking for too few homes.

I will be updating the above charts each quarter, or more often, if necessary, as the year progresses. Be sure to stay tuned to the blog more updates.