Palo Alto Market Conditions March 2014

• Lower end sales spike
• Inventory creeping up
• Median sales price flat from February
• Homes on the market only 10 days

Pending sales of single family detached homes priced under $3 million increased 83% in March from February. Above that price, sales were virtually flat. Inventory continued to increase in March but only by a few units. March was the fourth consecutive month with an increase in inventory. The median sales price was virtually flat but other price indicators showed strength.

The median sales price in February was $2,480,000, less than 1% below February’s $2,500.000. March’s price was 13% ($280,000) higher than the $2,200,000 posted a year ago. The average price per square foot fell from $1462 in February to $1312 in March, a decline of 10%. However March’s price per square foot was still higher than any other monthly price for at least the past two years. The average closed sale in March was for 116.5% of the list price, up from 115% in February and 114% a year ago.

Closed sales increased 21% in March, from 19 in February to 23. That was, however, 23% below the 30 closed sales from March 2013.

40 sales went into contract in March, the most since October (42). That was 17 more sales (74%) than February’s 23 but five less than a year ago. Inventory did increase for the fourth consecutive month but only by three units, from 22 at the end of February to 25 at the end of March. March’s ending inventory was six units higher than a year ago, when 19 homes were on the market. Inventory relative to pending sales fell again in March to 0.6 months, from 0.9 months at the end of February. 0.4 months of inventory were available a year ago.

March’s closed sales were on the market for an average of 10 days, down from 18 in February. That was the second fewest days in over two years. September 2013 was the only month where home were listed for less days (nine).

Analysis by Price Range

Pending sales of homes priced under $2 million increased 54% in March, from 13 in February to 20. March was the third consecutive month with increased sales for this segment. There were still eight less sales than a year ago, however. Inventory is having difficult time keeping up with demand. Only five homes were actively listed at the end of March in this segment, down from seven at the end of February and six a year ago. That left about one week of inventory relative to pending sales at the end of March, down from about two weeks at the end of February. 50% of the sales that went into contract in Paolo Alto in March were in this segment, but only 20% of inventory.

Homes priced from $2 million to $2.999 million also saw pending sales jump in March. 13 sales went into contract in this price range in March, up from five in February and even one more than a year ago. Inventory increase from four homes at the end of February to six at the end of March. Inventory relative to pending sales fell from 0.8 months at the end of February to 0.5 months at the end of March. 24% of Palo Alto’s inventory at the end of March was in this segment, as well as 33% of the sales that went pending during the month.

Three sales of homes priced from $3 million to $4.999 million went into contract in March, unchanged from February. Inventory increased from six at the end of February to eight at the end of March. Inventory relative to pending sales increased from 2.0 months at the end of February to 2.7 months at the end of March. 32% of Palo Alto’s inventory was in this price range, but only 8% of the sales that went pending.

Two more sales went into contract during March (three) than in February in the $5 million to $6.999 million segment. Inventory fell from three at the end of February to two at the end of March. This price range accounted for 8% of both inventory and pending sales.

Only one sale of a home priced at $7 million or more went into contract in March, the same as in February. Inventory increased from two at the end of February to four at the end of March. 16% of Paolo Alto’s inventory at the end of March and 3% of the sales that went pending during the month were in this segment.