Market Report For Palo Alto, Menlo Park and Atherton

The local housing market stabilized this year with prices mostly leveling off after reaching stratospheric valuations. Demand from international buyers has slowed down but we are still seeing multiple offers on many of our listings although the number of offers has decreased. The current local real estate market appears to be a healthier and more balanced one. The median sales price for a single family home in Palo Alto decreased so far this year to $2,560,000, a decrease of 4.1% . The sale to list price ratio is 103.9% as opposed to 113.8% in 2015 and the average days on the market is 23 days as opposed to 13 days in the first half of 2015.            Palo Alto Median Home Price For the Last Four Years                  Price Per Square Foot By Areas in Palo Alto  For Menlo Park the median sales price surprisingly increased 10% to $2,235,000 so far this year. The sale to list price ratio is 105.6% as opposed to 110.2% in 2015 and average days on the market is 20 days as opposed to15 days in 2015.              Menlo Park  Median Home Price For the Last Four Years           Price Per Square Foot in Different Areas in Menlo Park For Atherton the median sales price decreased 14.5% to $5,475,000 so far this year. The sale to list price ratio is 99.7% for 2016 as opposed to 100.6% in 2015 and average days on the market is 47 days in 2016 as opposed to 57 days in 2015. Atherton  Median Home Price For the Last Four Years       Price Per Square Foot in Different Areas in Atherton The townhouse and condo market was slightly down. The median sale price in Palo Alto is $1,534,000 as opposed to $1,542,000 in 2015 (a decrease of 0.5%) and the sale to list ratio is106.6%. In Menlo Park the median sale price decreased 5.7% from $1,343,000 in 2015 to $1,267,000 in 2016.  About the same number of homes sold during the first half of 2016 as sold during the first half of 2015. 170 houses sold in Palo Alto (compared to 165 in 2015), 152 houses sold in Menlo Park (compared to 150 houses in 2015) and 37 houses sold in Atherton (compared to 39 houses in 2015).   The stabilization of our local market was not surprising after the prices reached stratospheric level and for the following reasons: 1-         Chinese interest in our local real estate market has slowed down. 2-         Fewer homeowners elected to upgrade due to the significant increase to home prices in recent years. 3-         The capital gain and other charges that seller has to pay when they sale their homes discouraged many sellers from downgrading. Looking Forward: The Bay Area has the strongest economy in the entire country, and nearly in the entire world. Job growth spurred by the incredible resurgence of the technology sector in the Bay Area will keep the values of real estate assets high across the region as long as the economy is doing well.  The Federal Reserve has kept interest rates at rock bottom for several years as a way to pull the economy out of the Great Recession. Interest rates currently are still at historic lows. It is possible that the Feds will raise interest rates by the end of the year but the increase will not be significant to affect the market by itself. The question on everybody’s mind is: are we going to hit another bubble soon?  In our local market real estate and tech rise and decline together, but I doubt that this time we will witness a bubble. We witnessed a slight price correction this year that I predict will likely continue for a couple of years. Also the more stringent lending criteria that the Feds put in place reduce the likelihood of a bubble. Should I buy a house now? The question I hear often from my clients is should I buy a house now or wait in the hope that prices will fall further?  In the past and during recessions, the local market experienced an adjustment of up to 20% from the absolute high, and greater adjustments for upper-end properties. It is hard to guess when that kind of adjustment might happen again.  The real estate market goes through cycles. Buyers who try to wait for prices to reach the bottom before buying may miss the opportunity to buy. My recommendation therefore is to think strategically about when you want to buy and what kind of house you would like to buy and decide the risks that you are willing to take. If you find the right house for you, you may want to buy it now rather than wait for a market adjustment.  For sellers, the market appears to have reached a peak and prices have stabilized or are on the way down for some cities. Therefore It is a good time to sell before prices go further down and interest rates go higher and before the fundamentals in the economy change.  *Please share my semi-annual report with your friends who might be looking to buy or sell their home. I will be happy to answer any questions or discuss in further detail the state of the real estate market. *Statistics sources are from MLS and do not include private sales