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real estate trends

“The Old Paradigm Of Low Interest Rates … Is Not Going To Return”

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Ken Rosen, the chairman of the Fisher Center For Real Estate, at Berkeley’s Hass School of Business, talked recently about future real estate trends. Two points stood out: 1.) The old paradigm of low interest rates is not going to return in the foreseeable future. 2.) The doubling of debt service costs and cap rates has decreased values and now may be the best opportunity to buy real estate below replacement costs we’ve had since the early 1990’s.

Millbrae House Prices

Millbrae house prices

Millbrae real estate trends show relatively flat house prices after the price drop at the beginning of 2022. The drop in values Dr. Rosen talked about only weakly applies to Millbrae houses. However, he also brought up replacement costs. The increased financing cost and increased cost of materials has brought the construction of new market rate apartments to a halt in San Jose. Replacement costs have discouraged builders from starting new housing projects. With neither interest rates nor building costs likely to decrease, waiting for change before trying to achieve your housing goals is not likely to be a good plan.

Real estate economist Ken Rosen on YouTube.

Millbrae Average House Size Spikes Upward

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What stands out in Millbrae real estate? The average size of houses sold in Millbrae has changed surprisingly little during the last 25 years. However, the third quarter of 2023, as of August 18, is showing a sharp spike upward in the average size.

Millbrae quarterly average house size sold.

This spike seems to be more than just normal variability in an average. Eight cities in San Mateo County show a similar spike. The county average has been affected.

San Mateo County quarterly average size of houses sold

The eight cities in San Mateo County are Foster City, Menlo Park, Millbrae, Pacifica, Portola Valley, San Carlos, San Mateo, and Woodside. Palo Alto, at the border of San Mateo County, shows a similar spike.

With no recent significant economic changes nor changes in government policies, the fact that the affected cities are closer to San Francisco than other Silicon Valley cities seems to be the only common thing. Historically, San Mateo County was dominated by San Francisco newspapers, while Santa Clara County was dominated by San Jose newspapers. Perhaps the constant negative news surrounding San Francisco is making San Mateo residents reconsider where they want to spend their future. Homeowners whose children are no longer at home and those approaching retirement may have decided to sell. Price per sq. ft. has not climbed, so it does not appear that increasing demand from buyers is what is behind the change.