Real Estate

Real Estate Matters

Palo Alto real estate inventory up 20 percent over last year

The number of new listings in Palo Alto has jumped 20 percent in the first quarter of this year, compared to the same period last year. Sellers listed a total of 154 homes since the beginning of 2016.

At the same time, buyers have become more selective and more willing to wait, so properties have often stayed on the market for about five days longer than last year, or about 19 days. Also, the median home price has declined by more than 5 percent.

The increase in inventory has affected both high- and low-end properties, so the price drop likely reflects a short-term mismatch between increasing supply and weakening demand. As buyers become more picky, listings not priced fairly have stayed unsold for a longer period, and tend to have their prices lowered after losing momentum. On the other hand, homes with good presentation that are priced reasonably still attract strong interest. For instance, buyers are willing to put higher-than-asking, pre-emptive, all-cash offers on good rebuilding opportunities in North Palo Alto. Moreover, tastefully updated homes in Midtown and South Palo Alto could receive multiple offers and be sold well above listing prices.

Unlike Palo Alto, Los Altos has experienced a significant decline in supply. The number of new Los Altos listings has dropped by approximately 14 percent in the first quarter of 2016 compared with the same period last year. Listings there are being sold faster, within an average of 11 days this year versus 14 days last year, while the median home price has stayed almost flat, down slightly more than 1 percent, at $2.64 million.

One reason the median home price did not increase in spite of the lower supply has been that there have been fewer transactions in the premium North Los Altos area. In fact, North Los Altos may have become the most competitive high-end sub-neighborhood in the Midpeninsula so far this year. Those buyers with a more than 3-million-dollar budget who shifted from Palo Alto to North Los Altos, expecting less competition, only found themselves trapped in accelerated bidding wars.

Menlo Park, especially central Menlo Park, has gained popularity. Despite a nearly 7 percent increase in inventory in the city as a whole, both the median home price and the sold-price-per-square-foot of living area have increased in the first quarter of this year compared with last year. The median home price for Menlo Park has reached $1.96 million. Many listings in Central Menlo Park offer large lots, updated homes and convenient locations.

Further to the south, Mountain View and Sunnyvale have continued to see strong demands from first-time home buyers. Mountain View and Sunnyvale have always been more active in number of transactions than Palo Alto, Los Altos and Menlo Park. In the first quarter this year, despite a 26 percent increase in new listings, the median home price in Mountain View has climbed to $1.35 million, up 15 percent year on year. Sunnyvale has seen the same trend with a 22 percent increase in new listings, and a 7 percent increase in the median home price versus the same period last year.

The multi-million-dollar question is whether Palo Alto serves as a leading indicator toward a down cycle of the overall real estate market in the Bay Area. From a long-term cyclical point of view, the answer is likely yes. However, there are lots of moving parts to the market. The supply and demand of real estate are also very much affected by life events that are not predictable. The value-add of a real estate professional is then largely to help clients understand the change of the market, and set expectations accordingly.

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

Comments

4 people like this
Posted by Soul Brother
a resident of East Palo Alto
on Apr 26, 2016 at 11:56 am

[Post removed.]


3 people like this
Posted by random variation
a resident of College Terrace
on Apr 26, 2016 at 6:14 pm

This likely reflects random variation seem with small sample size. Only if this observation continues through next year, might we consider it a trend.


7 people like this
Posted by Midtowner
a resident of Midtown
on Apr 26, 2016 at 6:19 pm

I hate to say this, since I own a home in Palo Alto that may be losing value as I speak. However, if I was to buy a house in the area nowadays, money not being too big an object (which it is in reality), well, I would choose any town but Palo Alto. They airplane noise has made this town unlivable. I really think we should collectively sue the FAA for loss of property value. I bet you that would be buyers are starting to be aware of this issue and would rather buy in Mountain View nowadays, or Menlo Park, or Redwood City, anywhere but Palo Alto, where three or the four SFO bound routes meet.


2 people like this
Posted by blabber
a resident of Menlo Park
on Apr 26, 2016 at 7:10 pm

[Post removed.]


9 people like this
Posted by Midtowner
a resident of Midtown
on Apr 26, 2016 at 7:16 pm

Ah! Blabber from Menlo Park, thank you for your out-of-towner's contribution. Assuredly, you know what you are talking about even though you do not live in PA yourself. I am indeed planning on moving, and not to a desert island but to a town where the air traffic is not as egregious as in PA. As I said, any number of cities around here have it better than Palo Alto on this front. Regarding disclosures, I am afraid I will indeed have to disclose that we have a constant stream of airplanes above our heads at 4,000 feet. I agree with you on this one. As a homeowner here, it actually pains me having to face this.


3 people like this
Posted by Blabber
a resident of Menlo Park
on Apr 26, 2016 at 10:32 pm

Midtowner. Thank you for your erudite response. The mid peninsula is indeed a different place than when I moved here in 1965. Much of it is good but alas the area is fast becoming accessible only to the very rich and it is getting very crowded. I doubt that you will suffer any loss from the disclosure of noise from planes trains and automobiles. So many people want to be here they will gladly pay up to avoid long commutes and to be in an area with good schools and amenities. So unlike the castaways you may select a locale more congenial and compatible with your desire for peace and quiet.


2 people like this
Posted by Midtowner
a resident of Midtown
on Apr 26, 2016 at 11:55 pm

"I doubt that you will suffer any loss from the disclosure of noise from planes trains and automobiles."

This is just your opinion. Meanwhile, the real estate market is softening in Palo Alto, per the article.


11 people like this
Posted by Beg to Differ
a resident of Midtown
on Apr 27, 2016 at 10:12 am

I HAVE tried to sell, but was only offered below market rates due to excess noise from low flying planes, combined with people's fear of HSR coming through Palo Alto soon, as well as pollution from trains and traffic!

Add to that the loss from paying capital gains, plus increases in property tax, and there is not enough profit to make s healthy down payment on another home.

We need a larger house because of family growth, but we need to stay local due to our jobs being in high tech. We have only one carve cause I bike ride to work.

Worst of all, because of Chinese from mainland China paying cash for houses, it is very, very near impossible to outbid them unless you are a billionaire!


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

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