With just 3 months to go for 2022...how has the Hillsborough real estate market performed this year? When taken as a whole of closed sales from Jan. 1, 2022 - through Sept 28, 2022, and comparing the same time period for 2021*, the numbers indicate another banner year of rising price per sq. ft., increased average and median sales prices, and lower days on market. Price per sq. ft. is up 13% from 2021's $1,334, to 2022's average of $1,502. Average Sales Price is up 6% from 2021's $6,118,606 to 2022's $6,488,240. And Days on Market is down 32% from 2021's 44 days to 2022's 30 days. Median Sales Price is up 3.5% from 2021's $5,600,000 to 2022's $5,797,500. And what about eight-figure luxury sales? Sales at $10M+ remained fairly constant in 2022, with 13 eight-figure sales in 2022 reported to MLS (through the end of September, still time for more!) compared to 16 eight-figure closings reported to MLS for the entire year of 2021. (*Once we hit December 31, I will be updating the figures for a complete year over year comparison, Jan. 1 - Dec. 31. Figures in this paragraph reflect the parallel periods as of this writing of closed sales Jan. 1 - Sept. 28 for 2021 vs. 2022)

But from our seat approaching October 2022, it is evident this year's market can be partitioned into two markets: Pre-Shift and Shift. After a robust Spring 2022, which picked up where 2021 left off (and then some!), our local market begin to feel the effects of global economic volatility, rising interest rates, and a deflated stock market around June and July 2022, at which point we experienced some correction and shift in the Hillsborough market. It is helpful to compare closings from July-September of each year to tell the story: 2021 generated 38 closings between July 1 and September 28, with an average sales price of $7,057,789. 2022 generated 35 closings between July 1 and September 28 with an average sales price of $6,427,171...that's a 9% decrease in average sales price during this same period. The Median Sale Price for homes closed in July-September of 2021 was $6,658,000 compared to 2022's $5,495,000 for the same months. That's a 17% decrease on Median price during the 2022 Shift as compared to the same period in 2021. 

In a nutshell, Spring 2022 buoyed the overall numbers for the year. 2021 demonstrated a hot summer market compared to 2022's cooling summer market. If we were to sustain the performance of this year's July 1 through September 28 to the end of 2022, the cooling trend will become even more noticeable year over year. 

Another "Telling the Story" metric would be to compare the strength of all closings in 2022, but divided between periods of Jan. 1 2022 - June 30, 2022, and July 1 2022 - Sept. 28, 2022. *(Note: those closings occurring in the month of June were typically transacted or "went into escrow" in May, thus, starting the period at July 1st is a more accurate reflection of "summer" or the border of the shift around June/July.) The Median Sales Price for 2022 closings from Jan. 1 - June 30 was $5,955,000, which was 8% higher than the Median Sales Price of $5,495,000 for closings occurring July 1 through Sept. 28. 

As the numbers show, the Shifted market for the most part remains a seller's market. It has simply "normalized" recently from the robust gains of the prior 18 months. So far, this means longer days on market, fewer multiple offer dates within one week of listing, and the presence of some negotiating under asking price. Sounds like a "normal market!"  We just became a little jaded by the ultra-Frothy 2021 conditions, which were an extension of the Summer 2020 Covid Market Surge. As you recall, this Hillsborough Summer 2020 Covid Market Surge was heated up by "organic buyers" from within Hillsborough and surrounding cities seeking more stay-at-home space, better in-home Offices, ADUs, and swimming pools--all with the goal of around-the-clock home self-sufficiency in a changed world. Hillsborough was a magnet for this lifestyle. For 2022, amidst some Mid-Year normalization, Q2 and Q3 Hillsborough has still produced some jaw-dropping comps and elite over-asking performances fueled by high demand for Lower Hillsborough locations. Examples of this include 615 Devon, 1900 Willow, and 7 Windsor Court. 

The beauty of the Hillsborough real estate market is that inventory has remained stable and limited, regardless of market temperature. The inventory count has remained very consistent at about 25-30 houses for sale at any given time throughout 2022. Knock on wood, we have not seen inventory burgeoning into 45 - 50 listings on the market, which would indicate an over-supply. The other ironclad bright spot for the Hillsborough market is the strength of the high-end sector beginning at $9,000,000. Many of the buyers in this price range conducted themselves mostly immune to market or financial volatility, and confidently snapped up luxury properties. This can be attributed to limited supply for $9M+ Hillsborough properties, particularly in high-demand Lower Hillsborough locations. Many of these buyers had also been searching from the sidelines for 1-3 years, ready to pounce on the right listing, the definition of "pent-up demand."  2021 reported 16 total closed sales at $9,000,000 or more, while 2022 has reported 17 closed sales at $9,000,000 or more, with still 3 months to go in the year (not including Off-Market, Non-MLS sales). This is even more impressive considering the total volume of Hillsborough sales in 2022 will be 10 - 20 houses less than 2021. 

Key Take-Aways: 

• The 2022 Hillsborough real estate market will record many statistical gains above 2021, based primarily on a strong Spring. The market experienced a Shift and cooling trend beginning in June/July. 
• The downward shift in the market is better termed as a "normalization" vs. a decline
• Lower Hillsborough proved an over-achiever despite shifting market conditions, posting some very aggressive comps such as 1900 Willow, 7 Windsor, and 615 Devon. 
• The high-end market at $9,000,000 and above proved more resilient with high-demand, and was less impacted by rising interest rates. 
• Despite a cooling trend beginning around June, inventory has remained consistent and slim at 25-30 houses for sale through most of the year, without inventory flooding the market, thereby preserving a "normalized" seller's market.