January is always an important month in real estate. It sets the tone for the year ahead and often reveals early signals about buyer confidence, seller motivation, and overall market momentum.
As we move into 2026, the San Mateo County housing market is showing signs of renewed energy. Interest rates are near multi-year lows, inventory remains limited, and buyers are beginning to re-enter the market after the holiday slowdown. While the past year came with economic uncertainty, early indicators suggest a stronger spring season ahead.
Here’s a clear breakdown of what’s happening now, what it means, and what buyers and sellers should watch closely.
Interest Rates Are Giving Buyers Breathing Room
One of the most important shifts heading into 2026 is mortgage interest rates. As of early January, the average 30-year fixed mortgage rate is hovering around 6.16 percent, which is close to a two-year low. This decline has had an immediate psychological impact on buyers, many of whom paused their plans in 2024 and early 2025 due to affordability concerns.
Lower rates increase purchasing power, especially in higher-priced markets like San Mateo County. Even small rate drops can translate into meaningful monthly savings, making homeownership feel more attainable again.
Buyer Demand Is Returning Faster Than Inventory
January traditionally sees the lowest inventory levels of the year, and 2026 is no exception. Active and coming-soon listings dropped to their annual low at the start of the month, which is normal after the holidays. However, buyer demand is already increasing faster than new listings are coming to market.
Historically, this imbalance between demand and supply tends to build through late winter and early spring, creating more competitive conditions as the season progresses.
For sellers, this means less competition right now. For buyers, it means acting early can provide more leverage before the spring rush begins.
Home Prices Remain Strong, With Subtle Shifts by Property Type
San Mateo County continues to be one of the strongest real estate markets in the Bay Area. The median house sales price reached a new high in 2025, increasing approximately 1.5 percent year over year. This reflects steady demand in the single-family home segment, especially among higher-income buyers.
Condos, on the other hand, experienced a different trend. The median condo price declined about 4 percent year over year, suggesting more sensitivity to affordability, HOA costs, and buyer preferences.
This split market means pricing strategy matters more than ever. Not all properties are performing the same way, and recent comparable sales are critical when setting expectations.
Sales Volume Is Improving, But Still Below Long-Term Norms
Total home sales in 2025 increased about 5 percent compared to 2024, signaling that buyers are slowly returning. That said, overall sales volume remains low when viewed against historical averages.
Limited inventory continues to be the main constraint. Even with motivated buyers, fewer homes for sale naturally cap transaction volume.
January typically reflects contracts written in December, so sales activity is expected to rise as we move further into the first quarter.
Luxury Market Activity Is Outperforming the Broader Market
One standout trend is the strength of the luxury segment. Homes priced $5 million and above saw a 13.5 percent increase in sales year over year, outpacing the broader market.
Affluent buyers have been buoyed by strong stock market performance and gains tied to the tech and AI sectors. As a result, high-end markets within San Mateo County continue to see strong demand, even when more affordable segments move cautiously.
This trend reinforces how different buyer groups are experiencing the market very differently.
Homes Are Selling Faster, Especially Single-Family Properties
Speed of sale remains a strong indicator of market health. In 2025, houses sold in an average of 28 days, while condos took closer to 60 days on average.
Faster sales reflect confident buyers and properly priced homes. Homes that are well-presented and strategically priced continue to move quickly, even in a more balanced market.
Overbidding Is Still Common, But More Selective
Overbidding hasn’t disappeared, but it’s become more targeted. In 2025, 61 percent of houses sold over list price, compared to 29 percent of condos. On average, houses sold about 3.5 percent over asking, while condos averaged 3.5 percent under list price.
This tells an important story. Buyers are still willing to compete, but only for homes they perceive as well-priced and desirable. Overpricing is more likely to lead to price reductions than bidding wars.
What This Means for Buyers and Sellers
For buyers, early 2026 presents an opportunity window. Interest rates are favorable, inventory is still relatively limited, and competition has not yet reached peak spring levels. Being prepared and decisive can make a meaningful difference.
For sellers, the market remains healthy, especially for single-family homes and higher-end properties. Correct pricing, strong presentation, and strategic timing are key to maximizing results as more listings come online in the coming months.
Final Thoughts
The San Mateo County real estate market is entering 2026 with cautious optimism. While economic headlines may continue to fluctuate, local market fundamentals remain strong. Early-year activity suggests momentum is building, and the spring market is likely to be more competitive than what we saw late last year.
Understanding these trends early allows buyers and sellers to make smarter, more confident decisions.
If you’d like a deeper look at how these trends apply to your specific neighborhood or property, a tailored market analysis can provide clarity. Reach out anytime and let’s build a smart plan together for the year ahead.
