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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