After three or four years of a hyper activity and double-digit price increases, Palo Alto appears to be finding a more balanced real estate market. Buyers are being more deliberate and taking more time with their decisions. Homes priced under $3 million continue to be in very high demand and often sell quickly. Multiple offers are still common but where a quality, well-priced home might have received six or more offers, they may now get two to four. The inventory of homes at the high end of the market is increasing and they are staying on the market longer. The market remains very healthy, it just feels different than what we have become used to the past few years.
An indication of how the market has changed is the fact that over the past four years, the average sale in Palo Alto was for 110% of the list price. That ratio was 103.5% over the past six months and 100% in July. Homes are still selling quickly (24 days over the past six months versus 21 days over the past four years) but the trend is moving higher. Any time you have a market where homes are selling in 24 days at their asking price, you have a strong market. Opportunities exist in the current environment for both buyers and sellers.
Median Sales Price
The median sales price in July was $2.8 million, 12% or $290,000 higher than in June and 8% or $197,500 higher than a year ago. The price per square foot dipped in July, from $1,482 in June to $1,407, a 5% decline. July was also $106 lower than a year ago.
Closed sales fell from 34 in June to 31 in July, not far off the 34 sales in July 2015.
For Sale vs. Pending
The inventory of homes actively listed here remained high in July. 88 properties were on the market at the end of the month, eight more than at the end of June and 28 more than a year ago. This is another indication of the changing market. Over the first seven months of this year, the average inventory was 78 homes. During the same period last year, the average was 58.
Pending sales increased from 34 in June to 47 in July. Which were 13 more than a year ago. Homes priced from $2 million to $3 million had the biggest gains in sales (see below). Inventory relative to pending sales was cut from 2.4 months at the end of June to 1.9 months at the end of July.
Days to Sell
July’s sales closed in an average of 27 days, one more day than June’s and the longest homes have been on the market here since November. In July 2015, homes were listed for an average of 20 days.
Analysis by Price Range
Under $2 million
Homes priced under $2 million surprisingly had the biggest jump in inventory, from 13 units at the end of June to 23 at the end of July. Pending sales increased to 11 in July, up four from June. A 2.1 month supply was on the market at the end of July, up from 1.9 months at the end of June. 26% of inventoyr and 23% of sales were in this segment.
$2 million to $2.9 million
The $2 million to $2,999,999 price range continued to dominate sales in Palo Alto in July, accounting for over half of all sales. 24 sales went to contract during July, nine more than in June. Inventory fell by two units to end the month with 25 actively listed properties. That was 28% of Palo Alto’s total. The jump in sales dropped supply from 1.8 months at the end of June to 1.0 month at the end of July.
$3 million to $4.9 million
23% of inventory and 26% of sales were priced from $3 million to $4,999,999. 20 homes were available for sale at the end of July, three less than at the end of June. 12 sales went pending in July, four more than in June. Supply dropped from 2.9 months at the end of June to 1.7 months at the end of July.
$5 million or over
No sales of homes priced over $5 million went to contract in July, compared to four in June. The inventory of these homes fell by three to end July with 20, which was 23% of the city’s supply.
Check out these other Real Estate Market Conditions Reports for July 2016: