There are 2 definitions of red hot - one is that there are a lot of properties selling for high prices and another is that even if a lot of properties aren't being sold the prices are still high. It seems that the second one applies to Palo Alto/Los Altos/Menlo Park. There just aren't a lot of For Sale signs on the street, but values are up because demand is strong. Many sellers are willing to hold out for more, and often they get it. Keep in mind that these towns are in high demand, but every town has neighborhoods that are in higher demand than other neighborhoods in the same town.

Fri May 9 2008, 13:43

Manvi:

I would NOT describe the market in Palo Alto, Los Altos, and Mt. View as RED HOT!

That being said, I would not plan on buying a SFH in any of these communties at like a 10% discount from 2006 or 2007 prices. The demand for these communities is very high and inventory is still limited. The market has softened a little and (at worst for sellers or at best for buyers) is generally flat. The price range you mention is entry level for Palo Alto, Los Altos, and western Mt. View. These homes are in the greatest demand - the prices of this type of "product" have not fallen. I have a listing in Redwood City that has been on the market 6 weeks and I received 2 offers today on this property.

Tue Apr 29 2008, 13:56

Hi Manvi,

I posted a related question concerning market trends in palo alto. With regards to data quick information, the answers are only partially correct. While it is true that east palo alto and palo alto have the common zip code 94303, the zip code 94301 is unique to Palo Alto.
Data Quick shows the following for the 94301 zip code:
Palo Alto 94301 median price $892,500 % change -38.4%, $/sqft $814 # of sales 16 % change # sales -27.3%

I still haven't read a credible answer as to why these numbers are so different from what the MLS states. If you believe data quick prices are falling in palo alto.

Tue Apr 29 2008, 10:11

Re. Artur's point -- the "46% down" thingie was just too suspicious to be accurate! The only way you would get those numbers is if
a) You include East Palo Alto (EPA)
b) EPA has a surge of low-priced inventory

Both a) and b) are true and that's why you get the startling, but untrue, 46% down figure.

In fact, you won't find anywhere even in EPA where prices have gone down 46%! That number is purely a function of how the median works, and of how it can get skewed in particular markets.

Fri Apr 25 2008, 08:14

Kevin,
That's a good point. I was wondering how many condos you are selling in Palo Alto, but I couldn't see this as a factor. I guess zip codes are the reason. Palo Alto has zip codes from 94301 to 94309 including 94303 and East Palo Alto's zip is also 94303. So dqnews dumped everything together. We have the same problem with Burlingame and Hillsborough in San Mateo county. They share 94010 zip. If you look to dqnews statistics, you would think that Burlingame values are going down, while Burlingame prices are going up and Hillsborough is hurting. Thank you Kevin for clarification.

Fri Apr 25 2008, 00:25

DQNews.com is normally a very good source of real estate data, and Artur's point below is well taken. In the particular case of Palo Alto, however, my experience is that DQNews is NOT a good source of real estate data.

Here's why: DQNews for some reason considers Palo Alto and East Palo Alto be the same city, even though they're distinctly different cities -- in fact, they're in different counties! Also, DQNews for some reason leaves out the two of the most expensive zip codes in Palo Alto.

For more on this apparent error in DQNews data, see the below article on my blog, especially comment thread. [shameless plug]

Thu Apr 24 2008, 22:56

Manvi,
The hype is not necessarily based on facts. Following numbers are taken from dqnews.com. According to this data, the median price in Los Altos in February 2008 comparing with February 2007 increased by 11.6%, but dropped 6.4% in Mountain View and dropped by whopping 46.3% (!) in Palo Alto. Please note that these numbers include both homes and condominiums. The volume of homes sold also increased in Los Altos but dropped dramatically in Mountain View (by 37.5%) and in Palo Alto - by 50%. So, if you believe statistics - it is "bargain buying" in Palo Alto now!

Thu Apr 24 2008, 19:47

Hi Manvi,
The answer to your primary question is yes, it's red hot! It sounds like you may be from outside the area and are just getting acquainted with the local market. Be aware that those hysterical headlines in the newspaper, dire reports on TV, and gloomy blogs about the sad condition of real estate do not apply to Silicon Valley.
A quick check of the MLS shows that there is only one active listing in Los Altos around 1700 sf for under $1.7 mil. and it's been on the market for 7 days. There are 4 others that are pending and those sold in 37, 9, 9, & 14 days respectively. Under the circumstances, multiple offers seem like a possibility. If you do not find this sole offering attractive, do not lose heart, for this is a very diverse region and affordable solutions do exist. If you want, I can email you data on some areas that might interest you, but I'll need a lot more information from you. Feel free to email me and I'll be glad to help you find what you want.
Good luck,
Roland

Thu Apr 24 2008, 18:39

P.S. If you want to buy a home in PA without competing with multiple other buyers, wait till the period between Thanksgiving and Christmas. There tend to be fewer buyers out there; the flip side, of course, is that there also tends to be lower inventory.

For whatever reason, buyers in PA seem to prefer to buy only when other buyers are also buying.

Thu Apr 24 2008, 18:07

While things are slower than they were in, say, 2005, many homes in that price range are indeed selling with multiple offers. Well presented and priced homes are still creating a feeding frenzy and attracting multiple offers. In 2005 these multiple offers would have come within the first week; now it's taking a bit longer to get them. The spring market is indeed here.

Thu Apr 24 2008, 18:02