Palo Alto real estate

Palo Alto Market Conditions February 2016

  • Inventory jumps across the board
  • Sales stay low
  • Prices soften some
  • Sales strongest in low end

The Palo Alto real estate market continued to be spotty in February. Sellers came out in force in February, more than doubling Palo Alto’s available inventory. Pending sales were flat, with lower priced homes (under $3 million) having the most activity. Prices showed some softness in February, with all price indicators falling. It was the second straight month that the median sales price fell and was below the level of a year earlier. On the other hand, the average sales price in February was well above the average list price. A great deal of uncertainty remains and is causing buyers to be very cautious. However, the one thing that remains true is that homes that are priced appropriately sell quickly.

February’s median sales price was $2.18 million, down 2% or $45,000 from $2,225,000 in January and down 13.5% of $340,000 from $2,520,000 in February 2015. With the wide diversity of homes in Palo Alto, the median sales price can be volatile, depending on the mix of homes sold in a given month. In February, all but two closed sales were for less than $3 million. The price per square foot fell 8% in February, from January’s $1,615 to $1,486. February was also $105 lower than a year ago. The average sales was for 107.2% of the list price in February, just off January’s 107.6% and well below February 2015’s 113%.

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Closed sales increased by four units to 15 during February. That is about the same muber that closed in February 2015 (16).

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The increase in inventory in February was really the story in Palo Alto. Inventory increased 121%, from 33 at the end of January to 74 at the end of February. That ties for the most inventory at the end of any month during 2015, which was the most since April 2014. Pending sales were flat at 13, which was three less than a year ago. Inventory relative to pending sales jumped from 2.5 months at the end of January to 5.7 months at the end of February. Last year at this time we had a 2.7 month supply.

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It bears repeating, that homes priced properly sell quickly. More proof of that was the fact that February’s sales closed in only 21 days, down from 31 days in January and 34 days a year ago.

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Analysis by Price Range

While 20% of Palo Alto’s inventory at the end of February was priced under $2 million, 46% of its pending sales during the month were in this segment. The inventory of homes priced under $2 million more than doubled and sales remained strong. 15 homes were on the market at the end of February, compared to seven at the end of January. Six sales went pending during the month, two less than in January. A 2.5 month supply was available at the end of February, up from 0.9 months at the end of January.

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Both inventory and pending sales of homes priced from $2 million to $2,999,999 doubled in February. Pending sales increased from two in January to five in February. Inventory stood at 27 at the end of February, compared to 12 at the end of January. This price range accounted for 37% of inventory and 39% of pending sales. Supply dropped a little from 6.0 months at the end of January to 5.4 months at the end of February.

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The $3 million to $4,999,999 price range made up 30% of Palo Alto’s inventory but only 15% of pending sales. Inventory nearly tripled, from eight at the end of January to 22 at the end of February. Pending sales were unchanged at two. As a result, there was an 11 month supply at the end of February, up from four months at the end of January.

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No pending sales and increased inventory were the story for homes priced over $5 million. Inventory increased by four units to end February with 10. Pending sales fell from one in January to zero in February.

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