LOCAL REAL ESTATE MARKET REPORT AND FORCAST FOR 2012

♦ In 2011 the local real estate markets experienced an unexpected  stronger recovery while other areas in the country were still dealing with the high foreclosure rates that followed the 2008 financial crisis. In our market, home values appreciated as the local technology industry prospered.

♦ We frequently saw competition among buyers as young employees of companies that went public used their newly stocked bank accounts to buy their first homes and or to upgrade their existing homes.
♦ In addition, some buyers who were on the sidelines concluded that our local market had bottomed out and that it was time to buy before prices went up.
 ♦ Some sellers were encouraged by the frequent multiple offer situations to list their homes.

♦ Cash-paying investors were responsible for 38 percent of homes purchased in 2011 in the U.S. 
Our local market saw its own increased share of cash investors and buyers.

♦ The median home price increased 5.6% in Palo Alto ($1,450,000 in 2011 compared to $1,373,000 in 2010), an incredible 12.3% in Atherton ($3,295,000 in 2011 compared to $2,932,000 in 2010) and 11.5% in Menlo Park ($1,331,000 in 2011 compared to $1,200,000 in 2010).

♦ There were 447 sales in Palo Alto (compared to 436 in 2010), 69 sales in Atherton (compared to 78 in 2010) and 344 sales in Menlo Park (compared to 363 in 2010).. The ratio of sales price to list price in 2011 was 1.04% for Palo Alto, 99.8% for Menlo Park and 97.9% for Atherton.

♦ The upper-end market recovered strongly in 2011; according to the MLS listing services 38 listings sold in Atherton above 3 million Dollars, 33 listings in Palo Alto and 11 listings in Menlo Park.
Off-MLS activity also increased substantially in 2011, especially in the upper-end market.
 ♦ Although our local market saw significant increases in prices, average home prices are still below all-time highs (6.5% below 2007 all-time highs in Palo Alto, 3.7% below 2008 all-time highs in Menlo Park and 5.2% below 2007 all-time highs in Atherton).

Looking forward:

♦ Job growth is one of the most important factors to consider when assessing the housing market's prospects. Employment prospects in the Bay Area are projected to be strong and home prices are expected to increase in 2012.
♦ Our local housing market will continue to be strong in 2012, reflecting the pace of IPO’S and the increase in hiring that should continue.
♦ Many sellers who held off selling in 2011 will list their homes in 2012, thereby improving the mix of homes for sale compared with the last few years. Our inventory is very low and more listings are needed.
♦ A stronger economy will push Treasury bonds and mortgage rates up as inflation becomes more likely. However, the Mortgage Bankers Association expects interest rates to gradually rise through 2012, so buyers continue to have an opportunity to buy a house before interest rates goes up.
♦ The wild cards for 2012 are many, including federal, fiscal, monetary, and housing policies; the contentious political climate during an election year; unforeseen global events and the strength of the U.S. economic recovery.
♦ Despite these issues, It is important to keep in mind long-term fundamentals and not ignore the positives in the marketplace ─ in particular, historically low interest rates and still lower home prices in comparison to recent all-time high prices. If you have a stable income, it is an opportune time to buy a house.

Statistic sources are provided by MLs deemed reliable but not guaranteed.


Palo Alto Market Activity                                          Menlo Park Market Activity                                    Atherton Market Activity

Year	No. Of Sales	Year End Inv.	Median Price	% Change	Avg.  DOM	Year	No. Of Sales	Year End Inv.	Median Price	% Change	Avg. DOM	Year	No. Of Sales	Year End Inv.	Median Price	% Change	Avg.  DOM
2011	447	19	$1,450,000	+5.6%	30	2011	344	22	$1,331,000	+10.9%	44	2011	81	16	$3,295,000	+12.3%	77
2010	436	43	$1,373,000	+2.8%	44	2010	363	49	$1,200,000	+9.5%	51	2010	78	15	$2,932,000	+3.9%	110
2009	387	45	$1,335,000	-14%	50	2009	315	51	$1,095,000	-21%	54	2009	69	21	$2,790,000	-18%	109
2008	356	64	$1,550,000	-0.3%	24	2008	300	87	$1,386,000	+10%	36	2008	63	17	$3,380,000	-2.7%	49
2007	463	20	$1,555,000	+15%	24	2007	410	56	$1261,000	-1%	36	2007	80	15	$3,475,000	+5.7%	59
2006	489	30	$1,350,000	+ 3%	24	2006	354	28	$1,277,000	+ 2%	35	2006	99	19	$3,288,000	+ 9.6%	63
2005	536	38	$1,300,000	+13%	24	2005	454	43	1,250,000	+28%	27	2005	103	22	$3,000,000	+ 1.7%	51
2004	565	36	$1,150,000	+28%	30	2004	468	32	975,000	+15%	30	2004	102	29	$2,950,000	+ 35 %	78
2003	535	44	$900,000	- 3%	44	2003	503	47	849,000	+0.7%	45	2003	95	25	$2,175,000	-  9   %	100
2002	509	76	$925,000	+ 7%	43	2002	463	78	843,000	+  5%	37	2002	76	28	$2,397,000	- 13%	65