For months I have been writing about the recovery of the real estate market in Palo Alto and surrounding areas. The recovery of the technology sector and the resulting steep jump in demand for housing triggered a wild buyers' stampede. April’s median price for a single family home in Palo Alto hit an all-time record of $2.062M.
But the mood on the street may be changing. While information on sold homes consistently shows the sale price significantly higher than the asking price, the number of multiple offer situations seems to be decreasing. One of the indicators is inventory growth. There were 81 single family homes and condos for sale in Palo Alto last week, the highest number since the week of 8/12/2011.
About 5 weeks ago, we signed a listing contract for a house here in the Valley. At the time, the inventory level was much lower and it seemed that every house would be sold with at least a dozen offers. The owners of the house we listed were ready to put it on the market without any preparations - no staging, no landscaping, not even a fresh coat of paint. After all, they owned the house for more than 30 years and they still would make money on the sale.
But after showing them the homes on the market at the time, we were able to convince them that preparing house for sale will benefit them dramatically, however strong the market might be. The owners decided to renovate the kitchen, put in new floors, paint the house and landscape the front and back yards. Three weeks of construction work and the house was ready to be shown to the world in a newfound light.
The timing worked in such a way that we put the house on the market the day before Facebook went public. And to the surprise of many, the Facebook IPO fizzled. Every agent coming to the house during our Friday brokers' tour was discussing Facebook share prices and if they ever will go above the IPO level. These conversations signaled a change in the current perception of the real estate market – it was shifting right in front of our eyes.
The weekend’s open houses were not too busy, with people coming in but not getting interested enough to start asking serious questions about the property. It felt like the market had stalled together with Facebook shares. The listing price we agreed on just a few days ago seemed way too high and out of reach for the abruptly changed market conditions.
On Tuesday, just five days after putting the house on the market, we received a strong offer that the owners were happy to accept. Later the same day, we learned about the class action lawsuit that was filed against Facebook and Morgan Stanley on behalf of the shareholders who incurred losses over the first days of trading. Would this even influence the outcome of other near term transactions?
It used to be difficult to discern anything but long-term trends in real estate. In the current fast changing and uncertain economic environment, we sometimes notice behaviors and expectations changing overnight.
While interest rates have stayed at record low levels for the last two weeks, the performance of a single company or a political crisis in Greece may trigger a buyers’ flight away from the real estate market, just like a seemingly minor news release may cause day traders to dump the company stock.
Property Type: Single Family Home | Price $0 to $99,999,000
Trending Versus*:
Trending Versus*:
Market Profile & Trends Overview
Month
LM
L3M
PYM
LY
YTD
PriorYTD
PriorYear
Median List Price of all Current Listings
$1,875,000
-20%
-6%
Average List Price of all Current Listings
$2,564,083
-13%
-4%
April Median Sales Price
$2,025,500
20%
19%
24%
38%
$1,700,000
9%
16%
April Average Sales Price
$2,096,389
9%
7%
14%
20%
$1,961,245
4%
12%
Total Properties Currently for Sale (Inventory)
47
47%
-25%
April Number of Properties Sold
36
-14%
-44%
122
-15%
April Average Days on Market (Solds)
14
-13%
-33%
-59%
-52%
21
-40%
-28%
Asking Price per Square Foot (based on New Listings)
$903
-2%
1%
7%
9%
$893
8%
8%
April Sold Price per Square Foot
$982
5%
4%
12%
15%
$945
10%
11%
April Month's Supply of Inventory
1.3
71%
15%
33%
-15%
1.3
-37%
-18%
April Sale Price vs List Price Ratio
108.6%
-0.5%
2%
5%
6.1%
106.1%
5.0%
4.0%
* LM=Last Month / L3M=Last 3 Months / PYM=Same Month Prior Year / LY=Last Year / YTD = Year-to-date | Arrows indicate if values are higher (up), lower (down) or unchanged (flat)
Property Sales
April property sales were 36, down from 64 in April of 2011 and -14.3% lower than the 42 sales last month. April 2012 sales were at a mid level compared to April of 2011 and 2010. April YTD sales of 122 are running -15.3% behind last year's year-to-date sales of 144.
Prices
The median sales price in April was $2,025,500, up 23.9% from $1,634,907 in April of 2011 and up 19.9% from $1,690,000 last month. The average sales price in April was $2,096,389, up 14.2% from $1,836,124 in April of 2011 and up 9.1% from $1,921,489 last month. April 2012 ASP was at highest level compared to April of 2011 and 2010.
Inventory & MSI
The total inventory of properties available for sale as of April was 47, up 46.9% from 32 last month and down -25.4% from 63 in April of last year. April 2012 Inventory was at the lowest level compared to April of 2011 and 2010.A comparatively lower MSI is more beneficial for sellers while a higher MSI is better for buyers. The April 2012 MSI of 1.3 months was at a mid range compared with April of 2011 and 2010.
Market Time
The average Days On Market (DOM) shows how many days the average property is on the market before it sells. An upward trend in DOM tends to indicate a move towards more of a buyer's market, a downward trend a move towards more of a seller's market. The DOM for April was 14, down from 16 days last month and down from 34 days in April of last year. The April 2012 DOM was at its lowest level compared with April of 2011 and 2010.
Selling Price Per Square Foot
The selling price per square foot is a great indicator for the direction of property values. Since median sales price and average sales price can be impacted by the 'mix' of high or low end properties in the market, the selling price per square foot is a more normalized indicator on the direction of property values. The April 2012 selling price per square foot of $982 was up 5.1% from $934 last month and up 12.2% from $875 in April of last year.
Selling Price vs Original Listing Price
The selling price vs original listing price reveals the average amount that sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a buyer's market exists, a ratio at or above 100% indicates more of a seller's market. The April 2012 selling price vs original list price of 108.6% was down from 109.1% last month and up from 103.4% in April of last year.
Inventory / New Listings / Sales
This last view of the market combines monthly inventory of properties for sale along with new listings and sales. The graph shows the basic annual seasonality of the market as well as the relationship between these items. The number of new listings in April 2012 was 68, up 28.3% from 53 last month and down -2.9% from 70 in April of last year.
Property Type: Single Family Home | Price $0 to $99,999,000
Trending Versus*:
Trending Versus*:
Market Profile & Trends Overview
Month
LM
L3M
PYM
LY
YTD
PriorYTD
PriorYear
Median List Price of all Current Listings
$2,449,000
8%
40%
Average List Price of all Current Listings
$2,963,497
11%
34%
March Median Sales Price
$1,665,000
-14%
3%
5%
13%
$1,645,000
11%
12%
March Average Sales Price
$1,853,613
-11%
-1%
-10%
6%
$1,871,951
-2%
7%
Total Properties Currently for Sale (Inventory)
32
0%
-47%
March Number of Properties Sold
40
67%
-11%
84
5%
March Average Days on Market (Solds)
16
-45%
-36%
-24%
-45%
24
-31%
-17%
Asking Price per Square Foot (based on New Listings)
$928
11%
3%
12%
12%
$890
9%
7%
March Sold Price per Square Foot
$921
-2%
1%
5%
8%
$922
10%
8%
March Month's Supply of Inventory
0.8
-40%
-36%
-40%
-48%
1.2
-47%
-19%
March Sale Price vs List Price Ratio
108.8%
3.5%
4%
6%
6.3%
105.7%
5.0%
3.0%
* LM=Last Month / L3M=Last 3 Months / PYM=Same Month Prior Year / LY=Last Year / YTD = Year-to-date | Arrows indicate if values are higher (up), lower (down) or unchanged (flat)
Property Sales
March property sales were 40, down from 45 in March of 2011 and 66.7% higher than the 24 sales last month. March 2012 sales were at a mid level compared to March of 2011 and 2010. March YTD sales of 84 are running 5.0% ahead of last year's year-to-date sales of 80.
Prices
The median sales price in March was $1,665,000, up 4.7% from $1,590,000 in March of 2011 and down -14.4% from $1,945,000 last month. The average sales price in March was $1,853,613, down -9.7% from $2,053,508 in March of 2011 and down -10.9% from $2,081,417 last month. March 2012 ASP was at a mid range compared to March of 2011 and 2010.
Inventory & MSI
The total inventory of properties available for sale as of March was 32, equal to 32 last month and down -46.7% from 60 in March of last year. March 2012 Inventory was at the lowest level compared to March of 2011 and 2010.A comparatively lower MSI is more beneficial for sellers while a higher MSI is better for buyers. The March 2012 MSI of 0.8 months was at its lowest level compared with March of 2011 and 2010.
Market Time
The average Days On Market (DOM) shows how many days the average property is on the market before it sells. An upward trend in DOM tends to indicate a move towards more of a buyer's market, a downward trend a move towards more of a seller's market. The DOM for March was 16, down from 29 days last month and down from 21 days in March of last year. The March 2012 DOM was at its lowest level compared with March of 2011 and 2010.
Selling Price Per Square Foot
The selling price per square foot is a great indicator for the direction of property values. Since median sales price and average sales price can be impacted by the 'mix' of high or low end properties in the market, the selling price per square foot is a more normalized indicator on the direction of property values. The March 2012 selling price per square foot of $921 was down -2.4% from $944 last month and up 4.9% from $878 in March of last year.
Selling Price vs Original Listing Price
The selling price vs original listing price reveals the average amount that sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a buyer's market exists, a ratio at or above 100% indicates more of a seller's market. The March 2012 selling price vs original list price of 108.8% was up from 105.1% last month and up from 102.3% in March of last year.
Inventory / New Listings / Sales
This last view of the market combines monthly inventory of properties for sale along with new listings and sales. The graph shows the basic annual seasonality of the market as well as the relationship between these items. The number of new listings in March 2012 was 53, up 26.2% from 42 last month and down -36.9% from 84 in March of last year.
