Luxury Market Surges as Tech Wealth and Lower Rates Boost Demand

The Bay Area’s luxury real estate market—defined as homes priced above $3 million—showed remarkable strength through November 2025. While general market activity varied across counties, high-end properties continued to outperform, with the median luxury price reaching $4.05 million, now 6.5% above the prior market peak in mid-2022.

This year’s surge is especially evident in Santa Clara County, where the number of homes sold above $3M is approaching an all-time record.

Below is a breakdown of the latest trends across the region.

Why the Luxury Market Is Surging

Several macro factors are fueling this run-up:

• Tech markets booming: The S&P 500 and NASDAQ remain near record highs.

• Historic AI wealth creation: Companies like NVIDIA, Google, and dozens of AI startups have minted new multimillionaires with stock liquidity and secondary market options.

• Lower mortgage rates: 30-year rates are the lowest they’ve been in more than a year.

• Chronic inventory shortages: Especially in long-established luxury markets with <3% turnover.

The result? Homes priced correctly are moving lightning fast, often with multiple offers.

County-by-County Breakdown

Santa Clara County: The Luxury Powerhouse

Santa Clara continues to dominate—no surprise given the tech wealth centered in Silicon Valley.

• Median home price: $1.635M (↑ 4% YoY)

• Median days on market: 14

• $3M+ sales: 1,787 (nearly matching the all-time record in 2021)

• Price per sq ft: $1,627 (↑ 2.3%)

• $5M+ sales: 423, an all-time high, surpassing the previous peak of 340 in 2021

Key takeaway: Luxury demand is so strong that rebuilds, additions, and expansions almost always pencil out.

San Francisco: Strongest Performance Since 2022

San Francisco saw its best luxury performance in years.

• $3M+ sales in October: 71 (best since May 2022)

• Median home price: $1.502M (↑ 12.6% YoY)

• Sale-to-original-price ratio: 108.5%, showing aggressive bidding

• $5M+ sales: 23—the most since late 2021

San Francisco’s surge is tied to returning buyer confidence, major wealth effects, and an improving downtown sentiment.

San Mateo County: Consistently High Demand

San Mateo remains one of the most desirable and supply-constrained counties.

• Median luxury price: $4.387M (↑ 10.9%)

• Median days on market: 16

• Price per sq ft: $1,589 (↑ 8.1%)

• $5M+ sales: 273 (just one below 2022 levels)

Strongest markets: Burlingame, Hillsborough, San Carlos, San Mateo, Millbrae, and parts of Redwood City.

Ultra-Luxury Micro-Market Highlights

Atherton

• Median price: $10.7M

• Sales YTD: 70

• Median days on market: 12 (even at $10M+!)

Atherton remains the pinnacle of Silicon Valley wealth with unmatched demand.

Saratoga

• Median price: $4.4M (↑ 7.7%)

• Sales: 216 (down from 262 last year due to low inventory)

Large lots and top-tier schools continue to attract long-term buyers.

Los Altos & Los Altos Hills

• Median price: $4.68M

• Median days on market: 8
  A top benefactor of AI wealth concentration—particularly from NVIDIA and Google.

Palo Alto

Hasn’t grown as explosively in median price, but the high end is hot.

• Median price: $3.55M

• $5M+ sales: 107 (a record, surpassing 2021 and 2024)

Hillsborough

• $5M+ sales: 84 (strong, though shy of 2021’s 97)

Pricing fluctuates due to the wide range of estate-style homes, but demand remains solid.

What This Means for Sellers

If you're selling a luxury home:

1. Price it right—or get penalized

• Properties priced accurately are selling in under 3 weeks.

• Homes sitting longer than 21 days are overpriced—period.

2. Presentation and strategy matter

The market is bifurcated:
Well-priced, well-presented listings are getting multiple offers.
Greedy sellers are being forced into reductions or delistings.

3. Don’t rely on comps from six months ago

The market has shifted rapidly—use live data, not outdated sales.

What This Means for Buyers

1. Time is not on your side in the luxury market

The supply of premium homes in Los Altos, Hillsborough, Atherton, Saratoga, and Palo Alto is inherently limited.

2. Be financially ready

• Full pre-approval

• Liquidity ready (especially for stock-heavy buyers)

• No contingent-to-sell offers in this price band

3. If you’re upgrading, timing matters less

If your current home drops 3% but your next home rises 3–5%, waiting can cost you more.

4. Expect to hold long-term

Luxury homes are typically held for 15+ years.

Looking Ahead to 2026

Several indicators suggest continued luxury strength into 2026:

• AI-driven wealth is accelerating

• Mega-cap tech stocks are pushing toward trillions in valuation

• Mortgage rates are trending downward

• Inventory remains extremely tight

• More sidelined buyers may re-enter as rates fall

Unless inventory increases significantly, the competition in the $3M+ tier will stay intense.

Final Take

The Bay Area luxury market isn’t slowing down—it’s accelerating, with stronger fundamentals than even the 2021 boom. Whether you're buying or selling, strategy is everything, especially across micro-markets where trends vary dramatically.

If you’d like this recap adapted for your own newsletter, website, or local market report, feel free to ask!