Palo Alto Housing Sales: A lull in the recovery

After three quarters of steady recovery from a grim 2009, the end of 2010 saw a dip in both average and median prices in Palo Alto. Responding to buyers’ reluctance to pay prices that had risen above first quarter 2010 numbers, many sellers pulled their homes off the market, choosing to wait for better days. We anticipate a return of these sellers to the market in the spring, setting off another game of chicken between buyers who want 2009 prices and sellers who have shown an appetite to wait for more.

We analyze the individual neighborhood numbers with the proviso that many of these neighborhood statistics are built on small sample sets and should be read as indicators and not gospel.

Continuing its recovery from steep declines in early 2010, Barron Park saw incredible jumps in average and median prices. Inventory dropped while sales held steady. Fourth quarter sales were nearly double 2009 numbers.

The neighborhood continued its trend upward, as median prices jumped up almost 16%. In contrast to other areas, the higher end of the neighborhood seems to be moving fairly well.

A sharp drop in average prices shows a slow-down in the upper end of the Community Center market. Much of this drop is due to lack of inventory in that price point.

Dramatic average and median price drops from the previous quarter reflect the pull back of sales at the higher end of the price point. The market under $2,500,000 remains robust, but supply crept up late in the quarter as buyers waited out the holidays.

While below prices a year ago, the downtown market actually saw a jump up from 2010 third quarter prices, as buyers saw value and started to jump in. Inventory has returned to more normal levels after a glut in 2009.

Another neighborhood that benefited from strength at the lower end of the Palo Alto pricepoint. Green Acres saw increases in sales prices during a typically sleepy time of year. Inventory remains on the high side, but demand seems to be sufficient for these higher numbers.

Modest decreases in pricing is probably more attributable to fourth quarter slowdowns than a declining market. Midtown enjoyed a strong 2010, with prices appreciably higher than 2009 numbers. Inventory remained low in comparison to 2009 numbers.

Palo Alto’s priciest neighborhood remained in the doldrums, as the higher end price point continues to be stagnant. Median list prices are, on average, $325,000 over median sales prices, showing a disparity between what sellers and buyers think houses are worth.

The bleeding appears to have stopped, as Palo Alto Hills saw some sale prices off the early 2010 lows. Numbers are tough to believe in this low volume neighborhood, but our gut says there is value here. Some rural buyers are starting to wake up to the appeal of Palo Alto Hills.

Professorville remains one of the best performing neighborhoods in Palo Alto. A broad demographic of young professionals, empty nesters, and families keeps prices steady and inventory low.

South Palo Alto remains the steady performer it always is, with steady prices and sales. Supply remains consistent with demand. Well-priced homes don’t stay on the market very long.

A dip in prices seems to be caused by a jump in the number of sales, as sellers decided together that it was time to get out. By and large, prices remain steady for 2010 and inventory numbers seem stable.

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