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Midpeninsula Realtors are looking to a strong stock market, booming AI companies, a steady health care sector and the possibility of lower interest rates to give the fall housing market a lift.
A boost could help the local market recover from a year that started strong but slumped in the second quarter — typically the busiest time of year — as tariff upheavals under President Donald Trump shook the economy. The market swings and overall uncertainty left many buyers and sellers on the sidelines.
”The tariffs put people on alert and created some doubts over whether it was the best time to buy,” said Lori Buecheler of Compass in Palo Alto. “I anticipate a stronger fall season this year than in the spring.”
Surprisingly, in statistics compiled by Buecheler, this year is running ahead of 2024 in a couple of key areas.
Her data shows from January through August, the median sales price and new listings in Palo Alto, Menlo Park, Atherton, Los Altos, Los Altos Hills, Woodside and Portola Valley rose 4.5% and 4.8%, respectively, compared to the same period last year.
The overall median price for those seven cities rose from $3.3 million to $3.45 million, and new listings jumped from 1,838 to 1,924, she said.
But homes are taking longer to sell — averaging 2.7 months on the market, up from 2.4 last year.
AI money fuels market
The surge of wealth from Bay Area AI companies, valued at an estimated $6 trillion to $7 trillion in public equity, is driving demand at the top end of the market for homes priced $10 million and over, Buecheler said. That energy is filtering down into the region’s mid-priced and entry level housing inventory, she added.
Michael Repka, CEO of DeLeon Realty in Palo Alto, agreed that luxury sales should fare better this fall with upper-echelon employees in AI and other tech companies having greater incomes, job security and “frankly, just more options” than rank-and-file tech workers.
But he cautioned that the late-spring slowdown could very well continue into the fall season.
“Overall, we are seeing a market that is a bit skittish,” he said.
Median home prices in Palo Alto have slipped about 10–12% over the past two years, with August’s median at $3.55 million compared to $3.8 million in 2024. Many buyers are looking to nearby cities such as Menlo Park, Los Altos and Sunnyvale for better value.
Inventory opens up, but competition lingers
Across Santa Clara County, inventory is rising sharply. In July, there were 905 single-family homes on the market, up from 691 a year earlier. Condos and townhomes jumped from 398 listings in July 2024 to 643 this July, Realtor Barrat Mohammed of Intero Real Estate reported.
While he has found multiple offers not quite as plentiful as in recent years, they certainly have not disappeared.
“Properties in good neighborhoods with great schools still can draw multiple offers,” Mohammed said. “But it is not a seller’s market at this point. And any drop in interest rates will spike activity among buyers.”
Based on his data, Mohammed is predicting a more “normal,” less overheated fall market with fewer bidding wars.
Signs of momentum
In Menlo Park, Compass agent Elyse Barca sees signs of stronger activity. Stagers told her nine homes they had prepared sold in a single September weekend — three times the usual pace.
“That’s a strong indication of market activity this fall being more robust than what we saw last spring,” Barca said.
Mortgage rates in mid-September stood at 6.25% for a 30-year fixed mortgage and 5.25% for a 15-year fixed mortgage.
“There are plenty of people in the market today with money to buy,” Barca said. “And inventory is better now than it has been in recent years.”
Insurance adds new hurdles
One of the biggest challenges for buyers this year is the soaring cost of obtaining homeowner’s insurance — or even the ability to have access to it at all, Barca said.
Major wildfires in recent years that decimated thousands of California homes — from Los Angeles to Santa Rosa to Paradise — have forced insurance companies to dramatically raise monthly premiums, or withdraw coverage from fire-prone communities.
Industry analysts projected a 21% increase for California in 2025, significantly higher than the national average. In May, the state allowed State Farm to hike up its premiums by an average of 17% for California homeowner’s policies.
On the Midpeninsula, getting affordable policies — or any coverage at all — is more of a challenge in semi-rural communities such as Los Altos Hills, Woodside or Portola Valley, as well as some hillside neighborhoods in Palo Alto and Redwood City, according to Barca.
Luxury homes above the fray
Denise Welsh, Realtor and associate sales manager in the Los Altos office of Compass Real Estate, said she’s “on the fence” about fall real estate market prospects on the Midpeninsula.
There is a softening in the regional market, she said, with price reductions common in some parts of the Bay Area, such as the East Bay.
While that trend might affect properties in the lower- and middle-price categories of the local market, she said higher-end properties on the Peninsula should remain above the fray.
“Buyers in that category can be more discriminating,” Welsh said. “We still see multiple offers and (luxury) properties selling over list price.”
