Based on the Multiple Listing System, 59 homes exchanged hands in the first quarter, or about half the number from the same period last year. Total transaction volume dropped by almost 60% to $165 million, which translates to a lower median home price. The median home price of all sold homes in the first quarter was $2.68 million, 14% lower than the first quarter of last year, and a further drop from $2.79 million in the second half of last year. Average days on market of all sold homes in the first quarter of this year was 17 days, five days longer than that of the same period of last year. Spring is normally the high season and the lack of normal seasonality suggests that the downward trend of our local property market continues.
Weather definitely played a role in this soft market. The continuous rain delayed home preparation, hindered marketing activities and reduced open-house traffic. Some of the fresh new inventory has probably been sitting in the pipeline waiting for a sunny weekend that was rare in the past months.
The lack of high-priced home sales is another factor that contributed to the lower median price and lower total transaction volume. The most expensive home sold during the first quarter of last year was more than $13 million, and more than 10 homes sold for above $5 million. So far this year, $6.8 million was the most expensive home sold, and that's the only one over $5 million. The overall soft market gives sellers with expensive homes motivation to consider off-market selling more seriously. If mass marketing is unlikely to generate good results, tailored marketing may be more effective. In fact, I represented a buyer who found their dream home in Crescent Park off-market at the high-end segment.
However, even in a relatively slow spring market, there were still homes with multiple offers that sold within a week. In fact, the entry level to Palo Alto, the $3-million segment, has started to show more activities since March. My listing of an old home in a great spot in Midtown with decent 7,200-square-foot lot listed in the mid $2-millions attracted six offers. This reflects another interesting aspect of this spring market: The number of offers does not necessarily translate to the amount of overbidding that our real estate professionals are used to. For instance, six to seven offers in a hot market can easily lead to 20% overbidding, while we only see around 10% these days. In other words, buyers seemed to be more disciplined.
With the weather finally clear, we may see some new inventory. If interest rates keep coming down and there's no additional turbulence of the global economy, the spring market may make a belated fresh start. The biggest variables that could affect our local property market down the road are those well-anticipated IPOs, including Uber, Airbnb, Pinterest and Lyft. IPOs tend to create new wealth and demands on housing, especially in desirable neighborhoods like Palo Alto. The potential demand has actually already given current active buyers a push, as some of them figured that the window to shop around wouldn't be open too long. Some of the potential sellers also have considered delaying the release their homes to ther market until fall to capture the IPO wealth. However, stock performance is never one way. What if those IPOs don't do well? It would then hurt sentiment and general confidence in the Silicon Valley economy. Housing prices may then start to dive into a real downturn.
Xin Jiang is a real estate agent with Alain Pinel Realtors in Palo Alto. She can be emailed at firstname.lastname@example.org.
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