2026 Real Estate Forecast for Santa Clara & San Mateo Counties

As 2026 unfolds, homeowners, buyers, and investors across Silicon Valley and the Peninsula are asking an important question: What does the real estate market look like in 2026? After years of dramatic shifts—from record-low interest rates to affordability pressures and changing buyer behavior—the housing market is entering a more predictable and strategic phase.

Rather than volatility, 2026 is shaping up to be a year of stabilization, thoughtful decision-making, and opportunity for those who understand the market. Santa Clara County and San Mateo County remain two of the most resilient and desirable real estate markets in California, supported by strong fundamentals that continue to drive long-term value.

This 2026 real estate forecast breaks down what buyers, sellers, and investors can realistically expect in the year ahead.

A Shift Toward Market Normalization in 2026

One of the most notable themes of the 2026 housing market is normalization. The extreme conditions of recent years—such as rapid price surges, waived contingencies, and intense bidding wars—are no longer the norm across most price points.

In Santa Clara County and San Mateo County, the market is transitioning into one where:

• Pricing is more data-driven
• Buyers are more cautious and informed
• Sellers must prepare and price strategically

This does not signal a weak market. Instead, it reflects a healthier balance between supply and demand, particularly in higher-priced regions like Silicon Valley.

Moderate and Sustainable Price Growth

Home prices in 2026 are expected to see modest, sustainable appreciation rather than dramatic spikes. Limited housing supply continues to support prices, but affordability constraints and interest rates are keeping growth in check.

What this means for homeowners:

• Well-maintained homes in desirable locations should retain value
• Premium properties in top school districts will continue to outperform
• Overpriced listings may experience longer days on market or price reductions

Single-family homes remain the strongest segment, while condos and townhomes are expected to gain renewed attention from buyers seeking more attainable entry points.

Inventory Trends: Still Limited, But Improving

Housing inventory remains one of the biggest challenges in California real estate—and 2026 is no exception. However, inventory levels are expected to gradually improve as more homeowners adjust to the current market environment.

Inventory trends to expect in 2026:

• Slightly more listings compared to previous years
• Fewer homeowners waiting for ultra-low interest rates to return
• More strategic timing of listings, especially in spring and early summer

Despite these increases, both Santa Clara and San Mateo Counties will continue to experience below-average housing supply, particularly in cities with strong schools and proximity to major employment centers.

Interest Rates and Affordability in 2026

Interest rates remain a key factor influencing buyer behavior in 2026. While rates are higher than historic lows, buyers are increasingly accepting them as the “new normal.”

How buyers are adapting:

• Greater focus on monthly affordability rather than purchase price
• Increased use of rate buydowns and adjustable-rate mortgages
• More negotiation around seller credits and closing costs

Affordability remains a challenge, but demand has not disappeared. Many buyers are driven by long-term goals such as career stability, family needs, and lifestyle preferences—especially in high-demand regions like Silicon Valley and the Peninsula.

Buyer Behavior in 2026: More Selective and Strategic

Buyers in 2026 are significantly more informed than in past years. Access to data, market trends, and comparable sales has made buyers more analytical and less impulsive.

Buyer trends to expect:

• Fewer rushed decisions
• Increased inspections and contingencies
• More emphasis on condition and location

That said, desirable homes that are well-priced and move-in ready are still attracting strong interest and, in some cases, multiple offers—especially in cities like Cupertino, Palo Alto, Los Gatos, Menlo Park, and Burlingame.

Seller Expectations in 2026

For sellers, 2026 is a year where preparation and pricing matter more than ever.

Sellers should expect:

• Buyers to scrutinize condition and pricing
• Requests for repairs or credits
• Longer marketing timelines for overpriced homes

Homes that are staged, professionally marketed, and priced correctly continue to sell well. Sellers who understand current buyer expectations—and adapt accordingly—are seeing strong outcomes even in a more balanced market.

Differences Between Santa Clara and San Mateo County Markets

While these two counties are often grouped together, their 2026 outlooks show subtle but important differences.

Santa Clara County Forecast

• Strong influence from the tech sector
• Continued demand in cities with top-ranked schools
• More affordability options in areas like San Jose and Santa Clara

San Mateo County Forecast

• Strong appeal to buyers commuting to San Francisco and major tech campuses
• Extremely limited land availability
• Continued long-term value support due to location and lifestyle appeal

Understanding these local nuances is essential for accurate pricing and timing decisions.

Real Estate Investment Outlook for 2026

Real estate investors remain active in 2026, though strategies have evolved.

Investment trends include:

• Focus on long-term appreciation rather than short-term gains
• Continued demand for single-family rentals
• Interest in multi-unit and income-producing properties

High employment, rental demand, and limited supply continue to make Santa Clara and San Mateo Counties attractive for long-term real estate investment.

New Construction and Development in 2026

New housing development remains constrained by land availability, zoning regulations, and construction costs. While some multi-family and mixed-use projects are underway, new construction alone is unlikely to significantly ease inventory shortages.

This ongoing supply limitation continues to support home values across both counties.

Long-Term Outlook Beyond 2026

Looking beyond this year, the long-term fundamentals of Santa Clara and San Mateo real estate remain strong:

• Global demand for Silicon Valley housing
• Strong employment and innovation economy
• Limited land and housing supply
• Highly desirable lifestyle and school districts

Historically, these markets have shown resilience through economic cycles, and 2026 continues that trend.

Final Thoughts: What the 2026 Real Estate Forecast Means for You

The 2026 real estate forecast points to a market defined by stability, strategy, and informed decision-making. While the pace has slowed compared to previous years, opportunities still exist for buyers, sellers, and investors who understand the market and act thoughtfully.

Whether you’re planning to buy, sell, or simply stay informed, success in 2026 comes down to preparation, local expertise, and realistic expectations. If you have questions or need guidance, I’m always happy to help—feel free to reach out anytime.