The Palo Alto real estate story continues to be one of a shortage of inventory and a surfeit of buyers. We ended 2013 with virtually no inventory – a situation I have never seen before.
Statistics for the year were a progression of higher asking prices and higher yet sale results. In North Palo Alto, median sale prices rose 25% for the year, to $3,050,000 and are up 54% over Q4 2011. South Palo Alto was up 22% in 2013 to a median price of $1,980,000 and up 57% for the 2-year period. This marks a milestone entry level price for a single-family home in Palo Alto of almost $2 million!
Why is this happening? On the buyer side, the economy is very strong and there are a significant number of foreign buyers who see Palo Alto as a great place to invest. We’ve seen both of these factors before. On the seller side, behavior changed in 2013, as sellers were faced with a capital gains tax increase from 15 to 20% plus a 3.8% charge due to passage of the Affordable Care Act. The good news for long-time home owners is that their homes are worth MUCH more than they have invested in them. The bad news, in many cases, is that selling is now too expensive to make sense unless they want to leave the area – and most people who have lived here know there’s no place better!
So what does this mean for you? If you have been thinking of selling – and know where you want to go – this is a great time to do so. If you’re looking for a home, patience and flexibility are key. Be open to considering neighborhoods, and even cities, not previously on your radar screen. And make sure you have a realtor you are comfortable with and trust to stick with you for the long haul.
North Palo Alto 2013 Q4 Trend Charts
South Palo Alto 2013 Q4 Trend Data