The strength of our local housing market for the
first half of this year continued to be unprecedented, with new record sale
The median sales price for a single
family home in Palo Alto increased to a new record high of
$2,320,000 (compared to $2,100,000 for the first half of 2013), an increase
of 10.5% and 75% since 2009. The sale to list price ratio was 114.7% and
average days on the market was 13 days.
Menlo Park the median sales price increased 22% (from $1,510,000 to $1,845,000)
and 69% since 2009. The sale to list price ratio was 107.7% and average days on
the market was 20 days.
Atherton the median sales price increased 15% (from $3,575,000 to $4,100,000)
and 47% since 2009. The sale to list price ratio was 102.7% and average days on
the market was 56 days. It is important to note that Atherton is having more
private sales than any other town in the area.
July 1, 2014 the listing inventory was low with only 32 active listings of
single family homes in Palo Alto, 29 in Menlo Park and 25 in Atherton.
the first half of 2014 we sold 177 houses in Palo Alto (compared to 181 in
2013), 188 houses in Menlo Park (compared to 151 houses in 2013) and 59 houses
in Atherton in 2014 (compared to 54 houses in 2013). The number of houses sold
in Palo Alto and Menlo Park continue to decline because of the low inventory
and that in part explains the number of multiple offers on almost every
property and the significant increases in home prices.
question on everybody’s mind is: are we going to hit another bubble soon?
to Ken Rosen, UC Berkeley’s Chair of the Fisher Center for Real Estate and
Urban Economics department, we are not having a bubble anytime soon. He
mentioned that he might be concerned with asset evaluation more than 3 years
down the road. The U.S. budget deficit
is coming down dramatically, energy production in U.S. is soaring and year over
year employment growth is strong.
The US is experiencing the biggest boom in the
economy since the late 90’s. The Federal
Reserve Bank likely will have to start raising interest rates sometimes in the
plan to stay in your house more than 5 years, the best time to buy is now,
using at least a 7 year loan or longer.
are planning to sell your home in 5 to 7
years you may want to think about selling it soon so you are not selling in a
are ecstatic. They know that as long as they do not overprice their homes, the
homes will sell with multiple offers as soon as the sellers are willing to
listen to offers.
Asian investing trends
Chinese interest in our local real estate
market has grown exponentially in recent years and represent 35% of the total
interest is due to multiple factors: the proximity of the region to China, the
local Chinese community, pristine environment, the sought-after schools and
colleges, the political stability and the immigration laws.
had an estimated international real estate sales of $68.2 billion for the
period from April 2012 to March 2013.
The Asian share of this market was 54%.
Canada notably Vancouver along with New York, Los Angeles, Philadelphia,
Detroit and Houston by far attract the most Chinese buyers.
What is the reason for the recent surge in
The recent Chinese surge in investing in real
estate is the product of political and economic policy changes in China. In
1980 Chairman Deng Xiaoping opened China to foreign investment in the global
market and limited private competition, which spurred China's economic
transformation and modernization and raised the standard of living for millions
the Chinese government changed allowed the purchase of homes for cash.
Previously the government allowed like kind exchanges. This fundamental changes
allowed market forces to drive the price of homes. China real estate market
became one of the fastest growing market in the world.
2011, concerned about a housing bubble, the Chinese government began tightening
home buying rules. In certain cities, locals could only buy one home. Unmarried
nonresidents could not buy property in some cities, like Shanghai.
In March 14, 2013 President Xi Jinping coined
the "China Dream" as a renewal of the Chinese nation, with greater
emphasis on collectivism and refraining from showing excess of consumption. His
campaign against corruption and petty officialdom has resulted in 40,000
officials being disciplined and 10,000 officials fired. This sudden shift is
one of the main reasons more Chinese are buying property abroad. They want to
retain their lifestyles and keep their money safe.
A final note: on May 8, 2014 the Chinese
government passed the Outbound Direct Investment Rule that allows projects
abroad below $1 billion in non-restricted areas (the Bay Area is one of them)
without the approval of the National Development and Reform Commission and up
to $2 billion would only need the approval of the state council. This new rule
will encourage capital investment abroad and consequently will impact the
demand in our residential area.
Asian American Market represents a huge growth opportunity and is expected to
reach $1 trillion in just five years.
Palo Alto Median Home Price For the
Last Five Years (Increase of 75%)
Price Per Square
Foot By Areas in Palo Alto
Palo Alto Sales By
The strongest sales
activity In Palo Alto was in the $2 to $3 million price range (93 Units)
followed by the $3 to $5 million range (31 units) as illustrated in the
Menlo Park Median Home
Price For the Last
Five Years (Increase of 69%)
Price Per Square Foot in
Different Areas in Menlo Park
Park Sales By Price Range
The strongest sales activity in Menlo Park was in the $2 to $3 million
price range (35 units) followed by the $3 to $5 million range (29 units)
as illustrated in the following chart
Home Price For the Last
Five Years (Increase of
Price Per Square Foot
in Different Areas in Atherton
prices are not going down any time soon unless the economy or other
fundamentals change the direction of the market. Multiple offers will continue
to be the norm for the foreseeable future although we are seeing now a decrease
in the total number of offers received on a listing and prices seems to be
stabilizing. This could be only seasonal and buyers should try to take
advantage of that window.
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.
share my semi-annual report with your friends who might be looking to buy or
sell their home. I will be happy to answer any questions or discuss in
further detail the state of the real estate market.