Whether you are a first time buyer or seller, or have been through multiple transactions, you might be surprised by how quickly the real estate market changes in Los Altos, Palo Alto and surrounding communities. You need hard-hitting historical data, current market analysis, and insider experience to stay informed and succeed in these real estate markets.
As a service to their clients, Jeff Stricker and Steve TenBroeck of Alain Pinel Realtors provide regular market analysis and commentary. You are invited to read the entries below, add your comments, ask questions or contact them directly.
The real estate was as hot as can be in April. The number of homes for sale continued to fall. The demand for homes continued to rise. A top appraiser in the area told us that the number of all-cash offers was now clearly in the majority in the Palo Alto, Los Altos, Menlo Park areas. In addition to all-cash offers and significant over-bidding, terms of the offers are typically “as-is” with no contingencies, and free rent-backs for the seller, if desired. This is without a doubt a Seller’s Market!
Be careful not to over price the home. If your home doesn’t sell right away in today’s market buyers will assume that there is something seriously wrong with the home. As a result, you will sell for less if the home doesn’t sell in the first two weeks. If you’re thinking of selling – now’s the time!
Choose carefully! There is very little – if any – discount for negative issues (such as busy streets, odd floor plans, etc.) in a hot market. However, those properties can decline in value by as much as 40% in a slow market. And don’t be afraid to over bid. To win, you’ll most likely need to bid a significant amount over the asking price. Just be prepared to hold for seven to ten years and you’ll do just fine.
In the charts below, you’ll find 15 years of data for market activity and median sales price for the month of April for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.
WHEN WILL THIS HOT REAL ESTATE MARKET END?
All the usual signs of a “market top” are present: from front page newspaper headlines of a “Hot Real Estate Market”, cocktail party conversations about recent home sales, and high-priced homes selling quickly.
In a normal 7-10 year market cycle, the hot market (appreciating) phase usually lasts 2-3 years, but the duration can be affected by the Fed’s interest rate policies. For example, the price declining phase (2-3 years) and market bottom phase (3-4 years) were shorter this time, due to super low interest rates. Will the hot market phase last longer this time? Unfortunately, there’s no way to know when the market will change, only that it will!
All the usual signs of a market top are present: front page newspaper headlines of a “Hot Real Estate Market”, cocktail party conversations about recent home sales, and high-priced homes selling quickly.
GETTING READY FOR A CHANGING MARKET
Sellers: When the market changes, consumer confidence will drop; sales will slow; the number of homes on the market will rise; prices will stabilize and then fall. For those thinking of selling their home during the next 1-2 years, we recommend getting in touch with us now. We can advise you on how to prepare your home so it is ready to sell when the market begins to change.
Buyers: The key to success in a hot market is to select carefully. When the market is this hot, there is very little discount for irremediable issues (location issues, bad floor plans, etc). However, when the market cools those properties can decline in value by as much as 40%!
In the charts below, you’ll find 15 years of data for median sales price for the 1st Quarter sales for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.
2000 was the only year out of the last 15 that had a stronger real estate market than we’re experiencing today. The average sale price was 20% over asking price in Palo Alto, Los Altos, and Menlo Park in February 2000. And while we didn’t see sales prices average 20% over the asking price, in February 2013, Los Altos, Palo Alto, Menlo Park, and Mountain View all had record high median sales prices.
Here is another interesting comparison:
- Palo Alto median sales price is up by 350% in the last 15 years.
- Los Altos median sales price is up by 240% in the last 15 years.
- The Dow Jones Industrial Average is up by 44% in the last 15 years.
In the charts below, you’ll find 15 years of data for market activity and median sales price for the month of February for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.
In January 2013 new records were set for both highest median sales prices and lowest inventories of homes for sale.
This month we’ve focused on the market activity Palo Alto, Los Altos, Mountain View, and Sunnyvale. Below are 15-year graphs of activity and sales prices for the month of January. You can see why there are so many offers per property and why sales prices are rising so rapidly. The numbers of homes for sale is extremely low – probably the lowest since the 1950’s. You will have to look back to 2000 and 2005 to see similar high-demand, low supply ratios.
What is not recorded, unfortunately, are the numbers of offers per sale. We have been active in this housing market since the 1980’s and we’ve never encountered the number of offers we are seeing currently. For example, there was a sale in west Sunnyvale in late January of an entry level single family home that was listed at $925k. They received 62 offers! This many offers per property is an extremely rare event, of course, and the list price was undoubtedly too low, but still…unbelievable demand.
So, if you’re thinking of selling, what are you waiting for? And if you’re hoping to buy, fasten your seat belt and make sure your agent has a good strategy for success!