The price paid for single-family homes in Palo Alto took a huge leap in September, when the median price reached $3,337,500. This is 28 percent over the August median of $2,600,000.
Additionally, September 2015 was just the second month ever in which the median home price exceeded $3 million. The other time was in January, when the median was $3,095,000.
This jump doesn't necessarily signal a trend, although it could. The figure for January was bracketed by two more moderate monthly median prices: $2,250,000 in December, and back down in February to $2,460,500. After the drop in February, the price stayed in the mid- to high-$2 millions in all months leading up to September.
It's normal to see month-to-month price fluctuations in any real estate market. Many factors can drive prices up in a given month, but a single month isn't enough to point to a trackable trend. In the Palo Alto market, it's too early to tell if the $3,337,500 September median will be a continuing trend of home prices well into the $3 million range.
Relationship of price, inventory
We're moving into what we consider the "slow" season, primarily December and January, when the market tends to take a hiatus of sorts. In Palo Alto, that "hiatus" happens every year, but the effect is seen much more in the number of homes being listed than in the prices those homes sell for.
As an example, last December and January, 33 and 35 homes, respectively, were listed with the Multiple Listing Service. But look at the number of months leading up to December:
• November: 49
• October: 83
• September: 89
• August: 80
And then look at the months after:
• February: 53
• March: 75
• April: 92
• May: 84
There's a definite V-shaped trajectory where inventory levels in the "slow months" are concerned. But not where prices are concerned. Here are some select median monthly prices along with the number of homes that were available in that month:
• January 2015: $3,095,000/35
• February 2015: $2,460,500/53
• November 2014: $2,500,000/49
• May 2014: $2,218,000/94
• December 2013: $2,175,000/43
• September 2013: $1,888,000/87
Taking a look at the big picture over the past two years, we see one very clear trend: regardless of any monthly fluctuation, prices continue to rise. This trend is demonstrated by the median monthly price increase between September 2013 and September 2015: from $1,888,000 to $3,337,500, a jump of $1,449,500, or 77 percent in just two years.
Will home prices in Palo Alto remain above $3 million? No one can say for sure, but if the September 2015 median is the beginning of a trend, we'll probably see that trend moving predictably along, even during the "slow months."