The news about real estate activity in Portola Valley for the third quarter of 2015 is mostly more of the same. Prices have climbed to an average of $3.135 million and are holding steady. Attractive homes in great neighborhoods are selling quickly, in two weeks or less, while older or more remote properties may stay on the market many weeks, and sometimes months. Inventory continues to be an issue, as it is in most Peninsula communities. The one difference we’re seeing recently is a change in buyer mood as they pause, wondering if we have reached the peak of this real estate cycle and where the market will go from here.
Q3 Activity and Inventory
It’s striking to see that we started the quarter with only 17 homes listed for sale versus 26 from the same time last year—a 35% decrease in inventory. We only had 21 new listings this quarter and we ended this period with only 15 homes for sale. These are historically very low inventory numbers for Portola Valley. Of these homes for sale, half are located in the Los Trancos/Vista Verde neighborhood, considered to be too remote for many buyers.
Sold Prices and Price Per Square Foot
The small number of homes sold and the vast differences in the properties make it difficult to see a trend in sales prices by just looking at the statistics.
For example, the median sold price last quarter was $2.7 million, down 8.4% from an all-time high of $2.949 million during the same period last year. This was due to some higher-end sales during Q3 2014 and a wide variety of price ranges—from a low of $610K to a high of $10 million. However, the average price of $3.135 million was 1.1% higher than the same time last year, supporting the steady climb of prices across Portola Valley. The price per square foot remains above $1,000, up 10% from this time last year.
Days on Market (DOM)
Homes typically sold in 45 days last quarter, slightly higher than in the spring when the market tends to move more quickly. However, we see a dramatic difference when comparing this quarter to Q3 2014, when the median DOM was 87. Homes in the coveted Ladera neighborhood sold in less than two weeks. This DOM of 45 days is extremely low for Portola Valley and is likely to continue, with popular neighborhoods selling more quickly.
Percent of List Price
Portola Valley is starting to see the overbidding and multiple offers that many Peninsula communities have been experiencing for years. For example, in Ladera, where demand is much greater than supply, six of the seven homes sold for significant premiums over their list prices. The neighborhood average sold price was 113% of the median list price of $2.2 million. Two other homes sold for premiums this quarter: 20 Shoshone, a spacious ranch home on a rare, flat sunny lot on a cul-de-sac near Ormondale Elementary School; and 34 Grove, a beautifully updated mid-century modern home on a sunny knoll with spectacular Windy Hill views.
In the last few weeks, across all of our local markets, from Redwood City to Mountain View, we are starting to see a shift in buyer sentiment and a concern about whether or not we’ve reached the top of this cycle. It is manifested by longer days on the market, fewer offers, lower premiums and offers with contingencies. It’s still a seller’s market, with demand exceeding supply, so well-priced, well-prepared properties in good locations will certainly sell. The caveat is they do need to be prepared properly and priced right to get top dollar and avoid languishing on the market. This upcoming quarter can be an opportunistic time to buy and sell, as there is less competition for both buyers and sellers as the holidays approach.