Real Estate

Real Estate Matters

First half 2015 property market recap: Palo Alto, key neighboring cities

Time flies. Not long ago, most of property market participants anticipated yet another strong year. Half of 2015 has passed, and there have been some interesting developments and a few surprises.

First of all, based on both the number of listings and closed transactions, an overall strong 2014 has not been able to lift market activities so far this year. Palo Alto has experienced a 4 percent decline in the number of listings during the first six months this year, compared with the same period in 2014, and a rather significant 17 percent decline in the number of closed transactions. Menlo Park market activities have slowed down even further, with both measures declining double digits. In Cupertino, Los Altos, Mountain View and Sunnyvale, while the number of listings has increased by single digits, the number of closed transactions failed to reach the level of 2014.

Secondly, median home prices have increased by double digits in Palo Alto and all neighboring cities. In particular, Mountain View and Sunnyvale had median home price below $1 million a year ago, have had significant jumps of 37 percent and 31 percent, respectively. Buyers who could not find their desired homes and/or were priced out of Palo Alto have been driving the demand in Mountain View and Sunnyvale.

The moderate 15 percent increase in Palo Alto median home price so far this year, however, doesn't necessarily indicate price increase has slowed. Looking behind the numbers, homes sold this year are smaller in both living area and lot size compared with those sold in 2014. For instance, average lot size of sold properties in Old Palo Alto is 7,000 square feet this year versus 10,000 square feet in the previous year. From firsthand experience, cash-rich buyers who target north Palo Alto are willing to compromise on the condition of the house, but want a big lot size that offers potential. In a way, it was lack of that specific supply that limited the home price increase in Palo Alto.

Another market benchmark worth noting is sale price per square foot of living area. Palo Alto has reached an average of $1,395, and Mountain View approached $1,000 for the first time in history at $918. While most cities have consistent increases in both per-square-foot price and median home price, the increase in Mountain View and Sunnyvale of median home price is noticeably higher than the increase in per-square-foot price. A likely explanation is that initial-Palo Alto buyers who end up purchasing in Mountain View or Sunnyvale demanded relatively higher-end houses in those areas.

Overall, market activities have been slowing, especially since the start of summer. However, summer is the most active season for international buyers. Coupled with increasing uncertainties in the global economy, potential sellers have few reasons to wait on listing their home.

Xin Jiang is a Realtor with Alain Pinel Realtors in Palo Alto. She can be reached at xjiang@apr.com.

Comments

81 people like this
Posted by Conflict
a resident of Another Palo Alto neighborhood
on Jul 24, 2015 at 9:23 am

Two real estate agents and one former real estate agent, all of whom I know quite well, as well as an agent I have used in the past, have stated that they are convinced the bubble will explode in the next year. One of these realtors is getting out of the business, and has sold her house in Palo Alto in order to move elsewhere and buy two homes cash ( one to live in, one for rental income).

Another agent a relative knows, who left high tech to get into real estate, is giving up that business and going back into high tech.

Xin Jiang, a foreign-born non-citizen, may have a conflict of interest here, therefore her article is slanted in her favor and the industry's favor.


54 people like this
Posted by Bold!
a resident of Another Palo Alto neighborhood
on Jul 24, 2015 at 10:15 am

>> However, summer is the most active season for international buyers. Coupled with increasing uncertainties in the global economy, potential sellers have few reasons to wait on listing their home.

Congrats to this realtor for posting a big advertisement without paying Palo Alto Online a dime. Makes all the other realtors who pay to advertise here look like fools. Ethical fools, though.


8 people like this
Posted by oldtimer
a resident of Barron Park
on Jul 24, 2015 at 10:25 am

What would be more interesting to have an article on Palo Alto real estate is the sudden rise in the last four years. We started to hear about $250,000 over asking price. We thought that was a fluke. Then we heard about $500,000 over asking prices being paid. And now we have had near or over 1 million asking price paid on some properties. That has got to be a bubble.

Still, most likely, prices will hold and not crash, just not increase at that crazy rate. But I'm not a real estate agent and just wonder how people can pay such prices.


38 people like this
Posted by Abitarian
a resident of Downtown North
on Jul 24, 2015 at 11:16 am

In calling a 15 percent increase in Palo Alto median home price so far this year "moderate", Ms. Jiang sets a very unrealistic expectation.

She goes on to say that price increases have *not* necessarily slowed, explaining that it's the lack of supply that has limited home price increases.

Of course, she concludes that "potential sellers have few reasons to wait on listing their home".

Ms. Jiang seems intent on fueling the frenzy rather than providing objective information to help readers get the most value from their real estate investment.


65 people like this
Posted by Private Parent
a resident of Fairmeadow
on Jul 24, 2015 at 12:28 pm

Has any real estate agent ever said, "Now is a bad time to list your home."?

Has one ever said, "Now is a bad time to buy."?

No credibility here at all. Prices are up, of course, and they might continue to go up--that would mean holding might be a good decision.

Of course, they might fall, and that would make selling now a good decision.

Either way, whether now is a good or bad time to sell depends a lot more on your own personal circumstances than what the market is doing.

But as long as agents are paid by the transaction, they will argue that you should participate in a transaction *right now*. You should make your own judgement.


37 people like this
Posted by Long Time Resident
a resident of Old Palo Alto
on Jul 26, 2015 at 10:01 pm

Friends
Hold on to your property and rent it out.

Use the money you make from rent to pay expenses when you move out of the area.

You have been protected by prop 13, so it best to rent your home and keep it in the family.

Palo Alto has ALWAYS had a strong rental market with Stanford and nearby start-ups.

It would be plain foolish to sell.

Use the example of real estate saavy Chinese - hold onto your land and just rent it out!


8 people like this
Posted by Austin resident
a resident of Palo Alto High School
on Jul 27, 2015 at 12:32 pm

Just please do not move to Austin, we cannot afford the pressure. $350 a sqft for teardown, $600 for a modern resort style finish home within 1-3 miles of downtown/UT.

Tons of near downtown homes still available.....


21 people like this
Posted by Suspiria
a resident of Another Palo Alto neighborhood
on Jul 28, 2015 at 1:45 pm

[Post removed.]


18 people like this
Posted by Frank Stern
a resident of East Palo Alto
on Oct 13, 2015 at 12:02 pm

Another opinion I found regarding Palo Alto real estate: Web Link


2 people like this
Posted by Evergreen Park Resident
a resident of Evergreen Park
on Nov 7, 2015 at 8:17 am

The comments from the "Long Term Resident" are spot on. Although, I don't agree with Prop 13, once you're in, it's best to rent out and keep the property in the family. You can always refinance if you want to buy something else. There is no way you want to give up the tax benefit....


1 person likes this
Posted by Evergreen Park Resident
a resident of Evergreen Park
on Nov 7, 2015 at 8:17 am

The comments from the "Long Term Resident" are spot on. Although, I don't agree with Prop 13, once you're in, it's best to rent out and keep the property in the family. You can always refinance if you want to buy something else. There is no way you want to give up the tax benefit....


43 people like this
Posted by BIG Conflict
a resident of Menlo Park
on Nov 7, 2015 at 6:26 pm

Meanwhile, there is a big new house that was completed 15 months ago that sits on the corner of Laurel and Woodland in The Willows. The asking price was 4.3 million....the house is still empty, no furniture or window coverings. Is it worth 15% more than when it was finished? There is no for sale sign, so apparently it is off the market and is now a ghost house.

Can you say neocolonialism?


14 people like this
Posted by Barron Park resident
a resident of Barron Park
on Nov 9, 2015 at 9:57 pm

Why does the Palo Online publish these "ads" by agents. Clearly meant to push the market to even higher levels, so the greedy agents can suck the life out of Palo Alto as they line their greedy hands with ill gotten gains.

I wish there was a way to demonstrate or do something against these agents pushing foreign buyers to take our land and houses.


Sorry, but further commenting on this topic has been closed.

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