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.
MULTIPLE OFFER FEEDING FRENZY IS THE NEW NORMAL
Former Republican National Committee Chairman Lee Atwater has been recognized as the person who coined the term, “Perception is reality”. That phrase certainly applies to our current housing market! Many potential home sellers are convinced they will achieve a higher sales price if they wait until Facebook employees are able to sell their stock after the upcoming IPO. As a result, they are holding off listing their homes for sale. Many buyers believe they will likely have to pay a lot more for homes once Facebook employees are able to cash out. Therefore, those buyers are willing to do “whatever it takes” to prevail in the multiple-offer-feeding-frenzy that is now happening up and down the Peninsula.
We have seen these imbalances in supply and demand before, (’97-’00, ’05 -’07) but not at this intensity. The number of all-cash, non-contingent, quick close offers is truly amazing – and extremely daunting for buyers competing with those offers!
THE RECOVERY CONTINUES
Atherton and the “hills” markets – Woodside, Portola Valley, Los Altos Hills, Saratoga, and Los Gatos – saw great improvement in the average percentage of list price received by sellers in the first quarter. This movement indicates that values are rising. And note the average percentage received in Palo Alto! The median sale price in Palo Alto and Los Altos is now above the previous high of ‘07/’08.
It’s Hockey Season! Prices continue to go sky high in Palo Alto and the surrounding communities. And the inventory of homes on the market continues to be as low as the rainfall this winter. This is making for even more multiple, over-the-asking-price, offers.
In the charts below, you’ll find 10 years of data for market activity and sales price in February in Palo Alto, Los Altos, Los Altos Hills and Menlo Park. We also compiled information about Condos and Townhomes in Palo Alto this month. Given that the average sales price of a single family home in Palo Alto is inching toward $2M, attached homes are becoming an attractive and affordable alternative. 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.
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.