15 July, 2013

Semi- Annual Market Report For Palo Alto and Menlo

Interest rates are at a two-year high and heading higher. The recent spike in rates has left buyers and sellers alike wondering how higher mortgage rates will affect the real estate market. 

Rising mortgage rates may finally be forcing many hesitant buyers into the market.  NAR's Pending Home Sales Index (PHSI), which is based on home purchase contracts, in May reached its highest level since late 2006.  NAR also announced it was upgrading its price forecast for 2013.

It appears some of the rise in contract signings could be from buyers wanting to take advantage of current mortgage interest rates before they move higher. This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.

Home prices are not going down any time soon unless the economy or other fundamentals change the direction of the market. Although interest rates are at a two-year high they still low in comparison to previous years.

As inventory levels have dwindled over the past year, the growing ranks of buyers have helped propel dramatic price increases. As long as our inventory remains low and demand is high, interest rates should not have a meaningful effect on the market especially given that a significant number of offers in our area are cash offers.  Multiple offers will continue to be the norm although the total number of offers received on a listing could decrease.

For the first half of 2013, the median sale price increased 25% for Palo Alto (from $1,726,000 in 2012 to a record high of $2,150,000), 15% for Menlo Park (from $1,325,000 to $1,525,000), and 12.5% in Atherton (from $3,200,000 to $3,600,000).


Palo Alto Median Home Price and Price Per SF For the Last Five Years

 

Price Per Square Foot By Areas in Palo Alto



Palo Alto Sales By Price Range

The strongest sales activity In Palo Alto was in the $2 to $3 million price range followed by the $3 to $5 million ranges as illustrated in the following chart:
 


 


Sale Price

Closed Sales, Number of

Sale Price, Median

$800 - 1,000

4

$975,000

$1,000 - 1,200

8

$1,108,000

$1,200 - 1,400

4

$1,275,000

$1,400 - 1,600

13

$1,450,000

$1,600 - 1,800

26

$1,678,000

$1,800 - 2,000

25

$1,889,500

$2,000 - 3,000

70

$2,387,500

$3,000 - 5,000

27

$3,325,000

$5,000+

9

$6,294,000
Menlo Park  Median Home Price and Price Per SF For the Last Five Years
 
 
 



Price Per Square Foot in Different Areas in Menlo Park
 
 
Menlo Park Sales By Price Range
 
The strongest sales activity in Menlo Park was in the $2 to $3 million price range followed by the $1.4 to $1.6 million ranges as illustrated in the following chart:
 
 
 
 
 

Sale Price

Closed Sales, Number of

Sale Price, Median
 

$200 - 400

4

$314,500

$400 - 600

14

$489,000

$600 - 800

13

$645,000

$800 - 1,000

18

$885,000

$1,000 - 1,200

16

$1,107,500

$1,200 - 1,400

17

$1,320,000

$1,400 - 1,600

21

$1,495,000

$1,600 - 1,800

13

$1,640,000

$1,800 - 2,000

12

$1,860,000

$2,000 - 3,000

44

$2,400,000

$3,000 - 5,000

17

$3,765,000

$5,000+
Home prices are not going down any time soon unless the economy or other fundamentals change the direction of the market. Although interest rates are at a two-year high they still low in comparison to previous years. As long as our inventory remains low and demand is high, interest rates should not have a meaningful effect on the market especially given that a significant number of offers in our area are cash offers.  Multiple offers will continue to be the norm for the foreseeable future although the total number of offers received on a listing could decrease.
It is important to keep in mind long-term fundamentals. For buyers it is an opportune time to buy before interest rates head higher and for sellers it is a great time to sell your home.



 
 
 
 
 


 

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