- Sales fall
- Inventory increases but still low
- Price indicators mixed
- Still a fair amount of uncertainty
- Low end selling fast
The Palo Alto real estate market sent off some mixed signals in January. On one hand, inventory rose a little but remains very low, while demand remained high. On the other hand, sales fell and price indicators were mixed. Lower priced homes are selling very well here, while there is much more caution on the high end. Potential buyers of higher priced homes appear to be holding off, as there is some concern a price “reset” may occur in the luxury market.
The turbulence in the financial markets and inevitable interest rate increases are making both buyers and sellers more cautious. It’s actually a great time to sell, however, as interest rates are still low and demand remains very strong, especially on the lower end. Getting pricing and presentation right are even more important than normal.
The median sales price declined 15% in January, from $2,607,000 in December to $2,225,000. January’s median price was also 22% lower than January 2015’s $2,847,000. It was the first time in two years that the median sales price was lower than the year before. January 2015’s median sales price was a record here, so falling below that is not necessarily surprising. The biggest reason the median sales price was lower than both December and a year earlier is the mix of properties sold. In January, nearly two thirds of the sales were below $2.5 million. In December, that ratio was less than half.
Two other price indicators rose in January. The price per square foot increased from $1,482 in December to $1,615 in January. That is the second highest price per square foot recorded here, beaten only by March 2015’s $1,688. The sales price to list price ratio was 107.6% in January, up from 106.2% in December but below January 2015’s 110%.
January’s 11 closed sales was the fewest here in a year. That was less than half December’s 23 sales but exceeded the eight sales closed in January 2015.
After falling for four straight months, inventory increased by five units to end January with 31 actively listed properties, matching January 2014’s inventory. Pending sales, however, fell from 21 in December to 15 in January. That was nearly double the sales from a year ago (8). Inventory relative to pending sales increased from 1.25 months at the end of December to about 2.1 months at the end of January.
Homes were listed for an average of 30 days in January. That compares to 21 days in Dece ber and 46 days a year ago.
Analysis by Price Range
Eight sales of homes priced under $2 million went to contract in January, two more than in December. Inventory fell by one unit to end January with eight. That meant there was one month of inventory on the market at the end of January, down from 1.5 months at the end of December. While only 26% of Palo Alto’s inventory was priced below $2 million, 53% of its pending sales were in this segment.
The inventory of homes priced from $2 million to $2,999,999 increased sharply, while sales fell even more so. 11 homes were actively listed in this price range at the end of January, up from six at the end of December. Only three sales went to contract in January, less than a third of December’s total of 10. Last month, there was less than two weeks of inventory in this category. At the end of January, that changed to 3.7 months. This segment accounted for 36% of inventory and 20% of pending sales.
In the $3 million to $4,999,999 price range, inventory increased by one unit to seven at the end of January, making up 23% of Palo Alto’s total. Three sales went to contract in January, two less than in December. January’s sales were 20% of the city’s total. Inventory relative to sales nearly doubled, from 1.2 months at the end of December to 2.3 months at the end of January.
Five properties priced at $5 million-plus were actively listed at the end of January, unchanged from December. One sale went to contract during January, compared to none in December. 16% of inventory and 7% of sales were in this segment.