October 2012 — The Pace of Sales is Picking Up

The beginning of fall is marked by an accelerated pace of sales in Palo Alto.  After 64 new listings came to the market in September, the inventory increased to 2.1 months, the highest level since February of 2011.

Reacting to this unexpected influx of inventory, sales activity increased and 44 single family homes went to new owners during October, a 57% jump from the previous month when only 28 homes were sold.  Also during the month 52 new contracts were ratified, setting the stage for an even higher number of sales in November.

Notwithstanding the increased supply, prices continued to climb, supported by near record low interest rates.  The median price of a single family home reached $1,845,000, a 2% increase from September and a 32% increase comparing with October of last year.

We continue to experience an unusually strong seller’s market in Palo Alto and a recent release of more than 30 new homes by DR Horton did not put a dent in the resale market.

This price pressure may be the real “Facebook Effect.”  The rocky IPO did not materialize as a significant factor influencing local real estate sales.  But more than 1 billion Facebook shares are set to become available for trading by year's end.

Facebook employees were allowed to start trading 230 million shares on September 31 and roughly 800 million additional shares became eligible to trade on November 14.  And while some investors worry about the Facebook shares holding their value, the influx of wealth into the local market is likely to push real estate prices even higher.

This post originally appeared on PaloAltoCal.com