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.
IPO’s are back; so are “dot-com boom” market conditions
LinkedIn employees and investors are leading the way in the early days of 2012 and the community is a buzz about the upcoming Facebook IPO. With all of this activity, it’s clear that Palo Alto is ground zero for much of the new wealth in the area. The multiple offers and over-bidding are reminiscent of the dot-com boom of ’99-’00. The average selling price in Palo Alto in January ’12 was 4% over the asking price.
Low Inventory Continues
Local inventory of homes for sale were down in January. This trend is consistent with rising (local) consumer confidence. Over the years, we have observed that when home owners have confidence in the economy, they believe the value of their home is rising and are less likely to want to sell in the near term. Buyers, on the other hand, are desperate to find something to buy before they are priced out of their target neighborhoods. This is a happy time for home owners in our area.
Please find charts of market activity and median sales price for single family home sales in January for the last decade in Palo Alto, Los Altos, Los Altos Hills and Menlo Park. Included are % of list price received and months of inventory which give you a more complete picture of supply and demand.
The San Francisco Peninsula & Silicon Valley real estate markets continued their spectacular recovery in spite of a global recession. Technology and social networking companies from Mountain View to San Francisco are rapidly expanding – and hiring. The demand for housing in this area is now nearly as strong as it was during the dot-com boom of ’98-‘00. Median sales prices, on average, were up 4% from last year, and up by 13% in Atherton.
Palo Alto Continues to Defy Gravity
Palo Alto again had the most overbidding in 2011 with sellers receiving 103.6% of asking price, on average. It also had the most expensive real estate in the area with homes selling at an average of $723 per square foot. Increases in sales prices and over-bidding are likely to continue in 2012, unless there is some major national or international financial upheaval.
Hills Markets Now Recovering
During the past few years demand has been low in Los Altos Hills, Portola Valley, and Woodside. Yet, in 2011 those areas had the greatest increase in sales volume over the previous year of all the areas covered here. In fact, Woodside’s sales volume was up by 84%!
High tech businesses from Cupertino to San Francisco continue to boom. Inventories of homes for sale are significantly lower than last year. The buyer to seller ratio is definitely favoring the seller, particularly in neighborhoods with good schools.
The percentage of list price sellers received for their homes rose again in the 4th quarter. The average selling price in Palo Alto was 3.4% over the asking price! Sales volume was down, particularly in Palo Alto, where folks are currently more likely to buy than to sell. This is also holding down the median sales price figures. For example, there were 50% fewer homes priced over $1.5m put on the market in Palo Alto during the 4th quarter in 2011 than there were in 2010.
More Homes on the Market; But Less Desirable Locations & Conditions
November 2011 home sales stats were recently published and while inventory of homes for sale was higher than last year in some areas, the “quality” of the inventory was poor. Many homes were not priced in accordance with their location or condition. This caused sales to be fewer than they would have been if those homes had been priced more accurately. Multiple offers, however, are still the standard for most accurately priced homes in this area.
Demand across all price ranges remains very strong following the strong performance of local technology companies. As a result, we expect home prices to continue to appreciate (subject to the non-collapse of the Euro). Interest rates remain at historically low levels which is also increasing demand.
Please find charts of market activity and median sales price for single family home sales in November for the last decade in Palo Alto, Los Altos, Los Altos Hills and Menlo Park. This historical trending, which we compile monthly, gives you the best perspective when evaluating market conditions. If you have any questions about the charts below or wish to get data and analysis about another town in the area, please contact us. We invite you to add your comments at the bottom of the post.
The economic recovery on the San Francisco Peninsula & Silicon Valley is continuing.
A strengthening jobs market and record low interest rates have continued to support buyer demand. Meanwhile fewer homes were put up for sale during the 3rd quarter compared to a year ago.
Total new listings (in all areas listed) were down by 17% on average from a year ago while sales in the third quarter were down just slightly. The total inventory of homes for sale at the end of the quarter was down by 25% from a year ago. We believe the number of sales would have been significantly higher if buyers had a greater number of homes to choose from.