10 Takeaways from Santa Clara County’s Housing Market - June 2025

The June 2025 housing report for Santa Clara County reveals a dynamic and fast-evolving market. While national headlines often focus on mortgage rates or the broader economy, what’s happening locally tells a more nuanced and specific story. From record-breaking prices to shifts in buyer preferences, this month’s data helps us understand what’s driving today’s housing activity and where the market may be heading next. In this post, I break down the 10 most important takeaways from the latest market data — all focused specifically on Santa Clara County. Before we dive in, the carousel below offers a quick visual snapshot of the 10 key takeaways.

Now, let’s dig deeper into what the data actually shows — and what it means for Santa Clara’s housing market.

1. Santa Clara County is now the most expensive housing market in the Bay Area for the first time in nearly two decades!

In May 2025, Santa Clara County surpassed San Mateo, San Francisco, and Marin to become the Bay Area’s most expensive county for single-family homes. The 3-month rolling median home price in Santa Clara reached a new all-time high — slightly over $2 million — and now sits just ahead of its long-time regional rivals.

This is the first time in nearly two decades that Santa Clara has claimed the top spot. Historically, counties like San Francisco and San Mateo led in median pricing due to dense urban demand and limited land supply. But 2023–2025 marked a major shift, largely driven by the continued rise of the AI sector. Santa Clara’s core cities — such as Palo Alto, Mountain View, Cupertino, and Los Altos — have seen an influx of high-income buyers tied to AI, cloud computing, and advanced chip manufacturing. These buyers are equity-rich, often tech-employed, and looking for family homes in high-performing school districts.

What’s especially notable is that this pricing growth occurred despite headwinds: rising mortgage rates, elevated economic uncertainty, and a general slowdown across much of the Bay Area. Most other counties saw flat or declining year-over-year price trends in May. Santa Clara was the standout exception — not just maintaining its pricing strength, but setting a new benchmark.

If you're a homeowner in Santa Clara, this means your property's value is likely at or near peak levels. For buyers, it signals that the county is no longer a slightly “cheaper alternative” to neighboring markets — it’s, for now, the region’s price leader.

2. Home prices in Santa Clara County reached a new all-time high in May 2025

In May 2025, the median sales price for single-family homes in Santa Clara County surpassed $2 million, setting a new record. This represents a 6% increase year-over-year, even as other Bay Area counties saw price declines or stagnation during the same period. This isn’t just a seasonal bounce — it’s the continuation of a longer-term price climb that began in early 2023.

What’s driving this price strength? First, the demand for well-located, move-in-ready homes remains high, especially in neighborhoods with top-rated schools, walkable amenities, and proximity to tech campuses. Buyers in these areas are often less sensitive to interest rate shifts, because they’re using stock proceeds, RSUs, or large down payments to fund their purchases. This has helped insulate the Santa Clara market from broader affordability pressures.

Second, this latest price record comes on the heels of several disruptive economic events earlier this spring — including a stock market downturn in April and a spike in economic policy uncertainty. Yet Santa Clara’s housing market proved resilient. While buyer activity briefly slowed, pricing remained firm, particularly at the upper end of the market. The luxury segment — which makes up a growing share of Santa Clara sales — continues to see strong competition and bidding activity.

For sellers, this new peak is a strong signal that well-priced homes — especially those in turnkey condition — can command premium offers. For buyers, it’s a reminder that waiting for a market dip may not lead to better pricing if inventory stays constrained.

3. Larger homes have appreciated far more than smaller ones since 2020

Between Spring 2020 and Spring 2025, 4+ bedroom homes in Santa Clara County appreciated by over 60%, compared to just 46% for 3-bedroom homes and 36% for 2-bedroom homes. This five-year trend clearly shows that larger homes have outperformed smaller ones in terms of price growth — and the gap continues to widen.

This shift began during the pandemic, when remote work changed how people value space. Homebuyers increasingly sought larger properties to accommodate home offices, private outdoor space, and multigenerational living. But the demand for big homes didn’t fade as the pandemic eased. Instead, it accelerated again in 2023 and 2024, fueled by rising tech-sector wealth, especially in AI-related fields.

In Santa Clara County, buyers looking for 4- or 5-bedroom homes are often in the move-up or luxury segment — and many are paying with a combination of stock-based compensation and equity from previous homes. These buyers tend to be less affected by changes in mortgage rates, making them more resilient in a high-rate environment.

On the supply side, inventory for larger homes has remained tight, particularly in highly desirable areas like Palo Alto, Saratoga, Cupertino, and parts of Los Gatos. New construction is limited, and existing owners are holding onto larger homes longer, reducing turnover. This supply constraint, combined with strong ongoing demand, has kept upward pressure on prices in this segment.

This trend has implications for both buyers and sellers. For sellers of larger homes, this is a particularly favorable market, with buyers still willing to compete for well-located, move-in-ready properties. For buyers, especially those moving up from a condo or smaller house, the price gap to trade up has grown — making timing and financing strategy more important than ever.

4. The luxury market in Santa Clara County is booming, with $5M+ sales up over 50%

Between March and May 2025, sales of homes priced over $5 million surged by more than 50% compared to the same period last year. In fact, March 2025 marked the highest single-month sales volume for this segment since mid-2021, reflecting a powerful rebound in ultra-luxury demand.

This growth is not just a statistical anomaly — it’s a reflection of deeper shifts in local wealth and buyer behavior. The continued expansion of the AI sector and tech-related windfalls in Silicon Valley have significantly expanded the pool of buyers with the means to purchase high-end real estate. Many of these buyers are either cash-ready or using large equity positions to fund their purchases, making them largely immune to current mortgage rate pressures.

Luxury buyers are also increasingly prioritizing premium locations, modern design, privacy, and proximity to top schools — characteristics commonly found in Santa Clara’s high-end submarkets like Palo Alto, Los Altos Hills, and parts of Saratoga. And with limited supply in these areas, competition has remained intense even as broader market activity has slowed.

Supporting this trend, Santa Clara County currently holds the strongest luxury supply-to-demand ratio in the entire Bay Area. With only 129 active listings above $5 million and 423 sales in the past 12 months, the luxury inventory-to-sales ratio is just 30% — an unusually tight level that strongly favors sellers.

This bifurcation of the market is clear: while some buyers at the entry and mid-tier levels are hesitating, high-end buyers are highly active and continuing to push the top of the market higher.

"Santa Clara County Luxury Home Sales ($5 Million+)" and "Bay Area Luxury Home Market – $5 Million+ Supply vs. Demand by County"

5. Homes priced between $2 million and $3 million are the most competitive in the market right now

As of June 1, 2025, homes in the $2 million to $3 million range have the lowest Months Supply of Inventory (MSI) in Santa Clara County — just 1.6 months. This is the tightest supply level of any price segment, indicating extremely strong buyer demand relative to available inventory.

To understand why this specific price band is so competitive, we need to look at both buyer and seller dynamics. On the buyer side, this segment represents the core of the “move-up” market — buyers who may already own a smaller home or condo and are now upgrading to larger, more centrally located properties. Many of these buyers work in tech or biotech, and their purchasing power is supported by stock compensation or equity from a previous sale. With limited new construction in central areas, these buyers are competing over a relatively small pool of well-located resale homes.

On the seller side, owners of $2M–$3M homes often have strong equity positions and are less likely to list unless they’re highly motivated. Many are holding back due to replacement cost concerns (e.g., trading up may be harder or more expensive), or they may already have low-rate mortgages they don’t want to give up. This has kept new supply in this range lower than buyer demand — even as overall inventory levels in the county have increased year-over-year.

It’s also important to note that this price segment aligns with the most active buyer pool in the county. According to year-to-date data, nearly 20% of all sales in Santa Clara fall between $2M and $3M, confirming that this is the “sweet spot” of the market in terms of transaction volume.

For sellers in this range, conditions remain highly favorable — particularly if the property is well-prepared, priced in line with recent comps, and located in a top-performing school zone. For buyers, competition remains steep, and being prepared with strong financing or cash offers is often essential to succeed.

6. Most buyers in Santa Clara County are purchasing homes between $1 million and $3 million

Through the first five months of 2025, nearly two-thirds of all home sales in Santa Clara County occurred in the $1 million to $3 million range. This price bracket represents the center of gravity for buyer activity — covering both mid-tier family homes and a portion of the lower luxury market.

More specifically, 23% of all transactions occurred between $1M–$1.49M, 21% between $1.5M–$1.99M, and 20% between $2M–$2.99M. These three segments together account for 64% of total home sales so far in 2025. By contrast, only 18% of sales were under $1 million, and those were overwhelmingly condos and townhouses — not single-family homes.

This trend reflects two key realities in Santa Clara County today. First, the entry-level for detached homes has effectively moved above the $1 million mark, especially in desirable school districts or areas with limited inventory. Second, many buyers in the $1M–$3M range are dual-income tech households, with sizable down payments, strong pre-approvals, or equity from a previous property. These buyers may be price-sensitive, but they’re also committed and capable of acting when the right home comes to market.

On the supply side, listings in this range have seen some increase year-over-year, but not enough to outpace buyer demand. This price band has also shown higher absorption rates and faster sales velocities compared to both the ultra-luxury and sub-$1M condo markets, reinforcing the notion that this is the most balanced and active segment of the market.

For agents, investors, and sellers, understanding that the $1M–$3M tier dominates local activity is critical for marketing strategy, pricing, and staging decisions. For buyers, this is where competition is most concentrated, and having a strong offer package is often necessary to succeed.

7. Condos and townhomes are losing momentum while single-family homes continue to lead the market

As of May 2025, both condos and townhouses in Santa Clara County saw slight year-over-year price declines, while single-family homes continued to hit new record highs. This divergence in performance reflects a growing gap in buyer demand between detached and attached housing.

Looking at appreciation since Spring 2020, the contrast becomes even more striking. Single-family homes have appreciated over 50% in the past five years. In comparison, townhouses have appreciated around 40%, and condos have gained less than 15%. This wide disparity shows that buyers have consistently favored detached homes, particularly those with more space, private yards, and better long-term livability.

This trend is also reflected in price per square foot. In May 2025, the median price per square foot for single-family homes reached an all-time high — over $1,100, while attached housing (condos and townhouses) saw year-over-year declines in this metric. The pricing spread between houses and attached homes is now one of the widest it has been in the past decade.

Why is this happening? The shift is partly demographic and partly financial. Higher-income buyers, especially those in the tech sector, are prioritizing space, privacy, and flexibility — features that condos and many townhomes can't easily offer. At the same time, attached homes are more rate-sensitive, as their buyer pool often includes first-time buyers who are more constrained by monthly payments and HOA fees. High mortgage rates and rising HOA costs have further weakened demand in this segment.

As a result, condos and townhouses are now seeing longer days on market, higher absorption gaps, and more frequent price reductions. Sellers in this category need to be highly strategic about pricing and presentation. For buyers, however, this may present an opportunity to enter the market at a lower price point, especially if they're looking for long-term value or investment potential.

"Home Price Appreciation by Property Type (2020–2025)" and "Median $/Sq.Ft. by Property Type" and “Median Condo & Townhouse Sales Prices"

8. Home sales dropped nearly 20% year-over-year in May, despite more listings on the market

In May 2025, the number of closed home sales in Santa Clara County fell by approximately 19% to 20% compared to May 2024, even though the total number of active listings rose significantly. This points to a growing disconnect between available inventory and buyer follow-through — a sign that while supply has increased, demand hasn’t kept pace.

This decline in closed sales follows a consistent pattern seen across several related metrics. Pending sales (homes going into contract) also trailed last year’s pace, and the absorption rate — the percentage of listings accepting offers — dropped sharply. For example, the absorption rate for single-family homes in May 2025 fell to 36%, while townhouses and condos dropped to 28% and 22%, respectively. These figures suggest that even when homes are listed, buyers are taking longer to commit — or choosing not to make offers at all.

So what’s driving this caution? First, even though stock markets recovered in May, buyer sentiment was still reeling from April’s spike in economic policy uncertainty and the sharp dip in tech stocks. Since closed sales reflect contracts typically signed 3–6 weeks earlier, May’s slowdown is more about buyer behavior in April — a month when confidence was low and volatility was high.

Second, many buyers today are more price-sensitive and value-driven, especially with mortgage rates stuck near 7%. Homes that are overpriced, underprepared, or in less desirable locations are more likely to linger or require price reductions.

Meanwhile, listing volume was 35% higher than May 2024, reflecting more seller activity — but without a corresponding increase in buyer action, more listings simply mean more competition and longer market times.

For sellers, this reinforces the importance of correct pricing and strong presentation. For buyers, it could signal improved negotiating leverage, especially for homes that have been sitting on the market longer than average.

"Listings Accepting Offers (Pending Sales)" and "Absorption Rate”

9. Price reductions surged 88% in May, as more sellers adjusted to shifting buyer behavior

In May 2025, Santa Clara County recorded an 88% increase in price reductions compared to the same month last year, marking the highest May count in over five years. This sharp rise in markdowns reflects a clear signal from the market: sellers are adjusting their expectations in response to slower buyer activity and increasing competition.

This spike in price cuts didn’t happen in isolation. It came just after a noticeable build-up of active listings throughout the spring, with total inventory up 35% year-over-year. While more homes on the market typically give buyers more options, they also force sellers to compete more aggressively on price, presentation, and value — especially when buyer urgency begins to cool.

At the same time, other indicators pointed to softening demand:

• Pending sales were down about 8–9% from May 2024.

• Absorption rates declined significantly across all property types, as a smaller share of listings went into contract.

• Closed sales fell nearly 20% year-over-year.

These trends suggest that many sellers entered the market expecting strong competition — perhaps based on earlier spring performance or record-high home prices — only to find that buyer behavior was more cautious than anticipated. As a result, more listings required price adjustments to attract offers.

Condos and townhomes in particular have been more susceptible to markdowns, due to affordability pressures in that segment and increased sensitivity to interest rates and HOA fees. However, even some mid-tier and luxury listings saw reductions, especially if they were misaligned with current comps or lacked upgrades.

For sellers, this is a clear warning: the market remains strong but unforgiving — homes that are not priced correctly from the outset are taking longer to sell and are more likely to require cuts. For buyers, price reductions present negotiation opportunities, particularly on listings that have lingered for several weeks or longer.

10. Homes are still selling quickly — but not as fast as in past spring markets

In May 2025, the average Days on Market (DOM) for homes in Santa Clara County was 17 days for single-family houses, 22 days for townhomes, and 29 days for condos. These numbers show that while homes are still moving at a healthy pace, the speed of the market has moderated compared to prior spring surges.

For context, during the spring peaks of 2021 and 2022 — when buyer demand was at its most intense — DOM figures for houses routinely dropped to just 7–9 days, especially for well-priced listings in competitive areas. Compared to that, the current pace reflects a more measured market where buyers are active but taking slightly longer to commit.

Several factors explain this shift. First, the increase in active inventory (up 35% year-over-year) has given buyers more options to choose from, reducing the urgency to act immediately. Second, even though Santa Clara home prices hit new highs, some buyers are proceeding cautiously due to lingering affordability concerns and broader economic uncertainty.

The April spike in economic policy uncertainty, combined with a volatile stock market, likely contributed to longer decision timelines in May. Buyers who would normally move quickly on a property may have paused to reassess their budgets or to watch the financial markets settle — especially those relying on stock-based compensation or planning to make larger down payments.

This easing in sales velocity doesn’t indicate a weak market. On the contrary, 17 days on market for single-family homes is still a relatively fast pace by historical standards. It simply means the market has shifted from “hyper-competitive” to “strategically competitive” — where quality homes in desirable locations still sell quickly, but only if priced correctly and properly prepared.

For sellers, this is a reminder that the market can still deliver fast results — but expectations should be realistic. For buyers, it may offer a slightly less stressful window to view, compare, and negotiate.

Last Words

The Santa Clara housing market continues to show remarkable strength, especially at the high end. While buyer activity has cooled slightly, prices remain elevated, inventory is still tight in key segments, and competition is steady for the most desirable homes. Whether you're planning to buy, sell, or invest, understanding how these local trends intersect with your goals is essential.

Note: All statistics discussed in this blog are based on MLS-reported data and are meant to illustrate general market trends. Median prices, price per square foot, and days on market are approximate and can be influenced by property type, location, and reporting limitations. Always consult a local real estate professional for property-specific analysis.