As many people know the inventory of homes for sale in Palo Alto has been at historic lows. For most of the year there were somewhere between 30 and 34 homes on the market at any given time. Today there are 54 and it has been running between 50 and 60 for the last few weeks.
So what happened?
Well, it seems to me what happened is that after 5 straight months of multiple offers and appreciating prices more owners decided they would sell their homes. I am sure more than a few decided that doing this at the time of the Facebook IPO was a good idea. Somehow their agents must not have told them that the money from the IPO would not be available to most of the employees for 6-12 months but that is another story. In any case the homes under 2 million are still selling quickly with multiple offers. However, the homes over 2.5 million, and especially those over 4 million do not have enough buyers to garnish multiple offers on most of these homes and they are sitting around longer.
So why the increase in these more expensive homes. Well, I can't believe it is all people who were waiting for the Facebook IPO because they did not know better. There is a bigger issue on the horizon. In 2013 there is supposed to be a 3.5% capital gains surtax placed on the gains above $250,000 for single owners and $500,000 for married owners. So if a couple has a 2.5 million gain on a home they will have to pay 3.5% tax on 2 million or $70,000 in addition to the capital gains tax on the 2 million on a rate that is still to be determined.Â
I believe that the intelligent Palo Alto seller who has large gains on their home is looking at the capital gains changes and was not bamboozled by the Facebook hype.Â
Don't get me wrong, I love Facebook, but it's effect on real estate was grossly over rated. If your interested watch my interview with CBS from last March where one agent said the market was all Facebook, and I said the opposite. http://sanfrancisco.cbslocal.com/2012/03/14/upcoming-facebook-ipo-drives-up-silicon-valley-home-prices/
If you have any questions about buying or selling a home in Palo Alto please feel free to contact me.
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