Many variables come into play in determining how long homes sit on the market, but taking the last two years into account, we're seeing a definite increase in how fast homes are selling.
Here are some contributors to the increased rate of home sales in Palo Alto:
Increased wealth of buyers. As the economy as a whole and the tech market in particular pulls further out of the recent recession, individuals have more cash to spend. This equates to more choices on where to live. When the Palo Alto real-estate market bottomed out in 2009, it wasn't because no one wanted to move here. It was because fewer people could afford it. Now, it seems that trend is reversing.
More qualified buyers equals more (and better) offers than are usually seen during a slow economy. An influx of offers from a larger pool of buyers means that people selling their homes have to wait less time before the right deal passes before them.
Fewer homes on the market. While January and February in 2013 and 2014 saw an equal number of Palo Alto homes sold (52), full-year stats from 2012 and 2013 tell a different story. Total units sold in 2013 was 609, a 23 percent decrease from 792 in 2012, a year that had homes spending an average of 70 days on the market.
Fewer homes available and more buyers who are flush with cash means that sealing the deal with the best offer is in most cases easier and quicker for homeowners.
Rebounding home prices attract investors. While the number of homes sold in Palo Alto in 2013 dropped from the previous year, the average 2013 sold price of homes was $1,775,881, up nearly 25 percent from 2012. For the first two months of this year, average sold prices are ahead of the same period in 2013 by close to 4 percent, with the biggest sales seasons still ahead of us. All indicators point to a gradual rise in home prices, and those who have the money are buying up homes as prime investments in what they consider a stable and growth-oriented market.
Eager buyers with sound offers get the homes of motivated sellers off the market fast. The majority of people purchasing homes in Palo Alto and the greater Silicon Valley are American citizens, although in the last few years, we've seen a large influx of highly motivated Asian investors purchasing homes here. In fact, home investment money from China is now second only to that from Canada on the list of international cash moving into our real-estate market.
Many Chinese investors are looking to remove their capital from their country and put it in what they feel is a much safer market. Shrewd business and tech leaders in China are buying up hundreds of millions of dollars worth of Bay Area properties solely as investments, because of a firm belief that those investments will pay off handsomely over time. Others are buying in order to relocate here, attracted by our outstanding schools where they'll send their children as well as opportunities in the vast range of high-tech companies located within Silicon Valley.
In conclusion, in March there were 42 homes for sale in Palo Alto. Prices range from $11,988,000 for a 9,508-square-foot estate with seven bedrooms to an $800,000 two-bedroom condo. It will be interesting to watch how the inventory level shifts in the coming months, and see if the trend of fewer days on market continues or if an increased number of homes are sold.
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