2013 was an amazing year for the real estate recovery! The median single family home price shot up by 21.9 percent for the Peninsula Region - including San Francisco, San Mateo, Santa Clara and Santa Cruz Counties. The highest gain was recorded in San Francisco County where the median price of a single family home increased by 28.4 percent to $700,000.
The price grew by 24.1 percent in San Mateo County to $912,000 for a single family home, 22.3 percent in Santa Clara County ($780,000 median price of a single family home) and 20.1 percent in Santa Cruz County ($605,000 median price of a single family home). The whole region experienced a shortage of inventory and posted a decrease in the number of sales in all price ranges and all property types comparing with 2012.
Palo Alto's median single family home price increased by 21.7 percent in 2013 and reached $2,100,000 for a single family home. While last year, Palo Alto's housing price rate of increase was in line with the regional growth, the Palo Alto home values ended at 35.5 percent higher than the boom prices of 2007-2008.
Four consecutive years of home value growth put Palo Alto way ahead of the region as a whole where the median home price is still 8.2 percent below the peak pre-recession level (in 2007 the median home price was $850,000, vs. $780,000 in 2013).
The outstanding Silicon Valley economy combined with the mature Palo Alto development created a severe shortage of homes for sale in the city. According to MLSListings.com, there were 569 new listings in Palo Alto last year resulting in 406 single family home and 112 condo sales, a 14.3 percent decrease comparing with the previous year.
Most properties were sold with multiple offers — on average Palo Alto homes sold at 10.3 percent above the asking price and in only 18 days. Last year, average sale price was 6 percent above the asking price and average time on market was 23 days. During the recession the average time on market was up to 54 days and homes were sold on average1.8 percent below the asking price.
According to Freddie Mac’s Primary Mortgage Survey the average 30-year mortgage rate was 4.53 percent for the week ending January 2nd 2014. While the interest rate increased by almost 1.2 percent since the beginning of 2013, there was no significant decrease in the demand for housing. Mortgage rates remain affordable by historical standards and many buyers have chosen to borrow money to buy their new homes even when they have had sufficient cash holdings for the purchase.
In 2014 we expect the median price to continue to grow but at a slower pace. A strong seller’s market will persist with the availability of homes for sale remaining low. Well-priced homes still sell after the first open house weekend, and multiple offers will continue to be common.
Smart buyers will have to compete for available homes not only based on the price but also on other terms of the purchase offer. Working with an experienced local realtor and a reputable lender will help you successfully close a deal.
Based on 2012-2013 data, we don’t anticipate strong seasonal trends. Last year home sales were evenly spread from April to November, with the highest home prices being recorded in February. If you are thinking about selling your home this year, the winter months will give you unprecedented opportunity to market your home to potential buyers with limited competition from other properties.
In a highly desirable community like Palo Alto there is no shortage of qualified buyers who are waiting for the right properties to come to the market.
Michael Talis is co-owner of TALIS Real Estate.
