2012 SEMI-ANNUAL LOCAL MARKET ACTIVITY AND TRENDS

The local housing market showed strength throughout the first half of 2012. The Facebook IPO fueled the market, with the buzz being that buyers were rushing to buy before Facebook went public and pushed up home prices.

Some sellers who held off selling in 2011 subsequently listed their homes in 2012, thereby improving the mix of homes for sale compared with the last few years.  However, inventory remained low in comparison to the demand.

A broad mix of buyers produced a huge demand and sparked a bidding war on almost every listing.  In the first quarter of the year a key missing link to the market's health returned - - move-up buyers who sell their existing homes to buy larger more expensive houses. In addition, first-time buyers encouraged by historic low interest rates and reports of rising prices, as well as a higher than average number of cash investors, fueled the bidding wars.

As of June 30 the listing inventory was at an almost historic low, with 46 active listings as opposed to 64 listings at the same time last year and 113 listings in 2010. The median sale price for the first half of 2012 was at a record high of $1,700,000 (compared to the previous record of $1,552,000 in 2007), the sale to list price ratio was 106% and the average day on the market was 21 days.

  SINGLE FAMILY RESIDENTIAL ACTIVITY - PALO ALTO

Semi- Annual	Current Inventory	Closed Sales	Average  DOM	Average  Sales Price	Median Sales Price	% LP Rec'd	Total Sales Volume
2012	46	215	21	1,941,000	1,700,000	106%	417,000,000
2011	65	246	34	1,810,000	1,550,000	102.40	436,000,000
2010	113	197	47	1,631,812	1,438,900	99.33	319,835,266

The strongest sales activity was in the $2 to $3 million price range followed by the $1.2 to $1.4 million ranges as illustrated in the following chart:

But many sellers remained on the sidelines, awaiting the anticipated spike in prices following the Facebook IPO. As it turned out, that IPO did not produce the expected results. We saw a slow-down in market activity since early June, and for now it is hard to determine if this is the historic summer slow-down with buyers going on vacation or a letdown following the Facebook IPO.

As of June 30 Menlo Park had 44 active listings, and for the first half 198 homes sold at an median sale price of $1,344,000, a sale to list price ratio of 102.5% and an average days on market of 28 days. The strongest activity was in the above $2 million range, followed by the $1.5 to $2 million range.

Atherton had 37 active listings at June 30, with 33 houses sold in the first half on MLS. The medium sale price was $3,305,000 compared to $3,295,000 last year. It is worth noting that we had strong sales activity off MLS, especially in Atherton.

Going forward, home sales strength will be influenced by many factors, including the overall health of the economy, job growth, the troubles in the euro zone, and the potential for rising mortgage interest rates.

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. For buyers  If you have a stable income, it is an opportune time to buy a home and for sellers it is a good time to sell your home.