Los Altos Real Estate Blog

Talk about ending the year on a high note, the average sales price in Los Altos in November was $1,921,827 which is up from $1,775,630 last month.  The median is down compared to last month but that's being caused by several low-end sales.  We saw the same issue last month but more so in November and we'll see it again in December.  A few sellers have been dumping smaller homes at really low prices which skews the average and median numbers quite a bit.  Even with those in the mix, the market is showing a lot of strength.

This time of year is great for home buyers but inventory continues to be an issue. There were 23 new single-family homes listed in November and 30 homes sold.  That's a net 7 unit drop in inventory, not including listings can are cancelled or expired (25 of those last month).  I'm seeing homes that have sat for weeks finally getting offers at the end of November and into December because the available inventory of homes is so low.  We're not seeing many new homes come at this time of year and the number of homes remaining on the market is extremely low.  There is 2.4 months of inventory based on current demand.

The sales to list price ratio is down a bit to 97.4% which is typical at this time of year.  When homes that have been on the market a while sell, they do so at a discount.  The current trend is seasonal and even then, it's strong for this time of year.

What you can't see in the numbers is that the buyer demand in Los Altos is huge.  There are several agents complaining that they can't find appropriate homes for buyers.  Many "would be" buyers are opting to rent until they can find a home they'll be happy with.  This spike in rental demand means that buyers are queuing up for next year, most likely in the late Spring to early fall timeframes.  The point is that now is the time to buy, while prices are where they are.

The local real estate market has continued to do well going into the end of the year.  While August was weak, which made Q3 a bit slower, the overall trend in Q4 is to stay strong.  The average and median selling prices were $1,775,630 and $1,740,000, respectively.  That's a 1.1% increase from September 2011.  Sales volume continued to do well in October with 30 homes sold compared to 27 last month.  While that figure is less than October 2010, there are also considerably fewer homes on the market.

Inventory is a continued issue, with far too few homes in affordable price ranges.  Only 32 homes were listed in October comparedto 47 in September.  The interesting part of this is that when August and September inventory grew, it put downward pressure on sales prices but only for those 2 months.  Now sales are closely matching incoming inventory and available inventory is dropping as some homes are taken off the market or listings cancelled.  The shortage should continue to put upward pressure on home sales going into November.

Where are the bargains?  Homes with location issues close to Highway 85 (can be noisy) and homes located on or close to busy streets are taking price reductions which makes them a "bargain".  Homes that are in good locations are still selling fast.  If you're looking for a deal, be prepared to make some concessions.  However, the homes still available are excellent deals.

The real estate market has held strong in September with a small drop in the average selling price compared to August, down to $1,755,000 from $1,807,000.  The median selling price was down to $1,502,000 down from $1,672,000 in August.  Part of the drop in the median is the flood of bargain homes on the market in recent weeks.  As is typical at this time of year, a handful of low-priced homes come on the market and sell quickly as spring buyers who lost out 6 months ago re-enter the market and snap up deals after school starts.  It's also a good time for investors to buy homes at the low end in preparation for development next year.

That said, there were 30 homes sold in September, up from 28 in August and the 2nd strongest month in the last 2 months.  What's interesting is that with so many sales, many of which are bargains, the remaining inventory in Los Altos is mostly higher-end which should help boost the ASP and MSP in Q4 (October - December).

Another interesting perspective on strong demand lies in the average days on market, which was down to 33 in September.  That's down 14 days from the August figure of 47, which confirms that buyers are making quick decisions and closing fast.

The prices paid compared to listing prices are still strong, holding at 98.8% last month compared to 98.3% in August.  This reinforces that the majority of the sales are at or very close to the listing price while many cash buyers are still in the market.

My suggestion for buyers looking in the $1.5 million or less market between now and the end of the year is to keep an eye on new listings and move quickly.  There will be opportunities for the savvy buyer.

The local real estate market is going to have another banner month with unit sales and prices up substantially over September 2010.  Going into the last week of the month, sales are already at 21 units versus 19 for last year.  The average selling price is also up substantially at just over $1.836 million compared to $1.682 million in 2010.  We'll see a handful of closed sales this week to alter the numbers just a bit.

What this means for home buyers going into Q4 is that limited inventory is pushing continued strong sales.  Homes are still selling quickly and at good prices.  Homes with location challenges or other issues are still selling with small price reductions.  On a price-per-square-foot basis, even the discounted homes are selling at or above market rates.

This month saw a home on Parma close at $4M which definitely helped lift the numbers up a bit.  There have been a few more homes than usual at the low end but nothing under $1 million.  That said, there have been a few homes under $1.5 million that have pulled the average down a bit.  The limited inventory of those lower-cost homes will have a lower impact in Q4.

Overall, it looks like this month has been a nice recovery from a seasonally slow August.  The numbers for Q3 look like a solid continuation of Q1 and Q2 which had a combined average sales price increase of 6.4%.

Los Altos real estate market report for September 2011

Home sales have seen another strong month despite reports in the media of nearly universal market weakness across all market segments.  I'm not sure where they get their numbers but Los Altos continues to see broad improvement and the continuing trend for 2011 is a strong increase over 2010.  On a month-to-month basis, the average and median were both up abotu 8 and 2% respectively. 

The average and media selling prices were $1,726,667 and $1,650,000 respectively.  Those figures are down substantially from August 2010 which showed $1,816,917 and $1,737,500.  While this might look like a bad trend, it's not.  Last year we saw substantial improvement in Q3 and Q4 which resulted in Los Altos showing a gain for the year.  That trend continued into 2011.  Numbers are lower in some months because we have a handful of smaller, low-cost homes pulling down the averages.

On a year-to-date basis Los Altos is up 4.9% compared to the same period in 2010 using average selling price.  It's up about 6.7% using the median price.  With limited inventory and a significant slowdown in new listings, buyers are faced with a decision going into the end of the year - buy now or wait and hope for something to come on in the late Winter months (January/February) before the hot spring market picks up.  With price increases continuing, my suggestion is to buy now.

Why is it slow this time of year?  Two things have kept new listings off the market in August; it's a seasonally slow month with kids going back to school and almost nobody puts their home on the market going into the Labor Day weekend.  Almost no new homes were listed at the end of August.  That keeps the selection limited starting in September and the first week of September is slow because it's the short Labor Day weekend.

How's the high-end market?  Doing great so far!  We have another large home in escrow on Parma at about $4 million.  We haven't seen many new listings at the high-end so as the limited inventory continues to sell, I expect we'll see prices rise a bit.  Demand is still strong and will continue into 2012.  The sale of high-end homes is pulling up the median and average prices in Los Altos quite a bit.

What is driving demand?  High-tech employment and the prospect of cash-outs from local companies is fueling new demand.  That will help boost sales in Los Altos as well as other high-end markets.  When one market goes up, so do others.

Today from 9:30AM to 1:00PM was the local broker tour, a chance for agents from all over the area to see what's new on the market.  Well, today's tour was extremely light on new homes.  Only 12 homes were being shown in Los Altos (2 in Los Altos Hills) and of those 7 were newly listed homes and 5 were re-tours (homes being shown to brokers again).  This means two things; new home inventory is not coming on very fast (typical for August) and there's a strong push to sell existing inventory.

There are some gems on today's tour.  The homes on 255 Lyell Street, 135 Lyell Street, and 11655 Jessica Lane (Los Altos Hills) are all gorgeous homes in good locations.  The first two on Lyell are very nice homes; with one being done to an extremely high level of quality (255 Lyell) and the other offering a very nice floor plan and quality contruction.  The home at 11655 Jessica is a nice house and located on a relatively private street with easy access to Rancho Shopping Center, Highway 280, and downtown Los Altos.

One interesting thing about all those homes is that for all the quality they have they're also extremely well-priced.  They all had price reductions and at this point I'm convinced they'll all get sold soon.  Given the limited inventory in Los Altos and Los Altos Hills in their respective price ranges, the buyer pool will likely make a move soon.  There were 3 more sales in Los Altos just within the last 24 hours which means that this week, regardless of the stock market craziness, we're still seeing strong sales activity.

Give me a call and I'll fill you in on the details of some of the others on the market this week as well as the newest listings.  The general trend is to price these homes well so I can give you some perspective on prices, sales activity and comps.

The real estate market in Los Altos held up well in July, considering that we have substantially fewer homes to sell than last month or even this time last year.  The average and median homes prices were about the same as last year (the median was actually up substantially) at $1,651,342 and $1,635,000.  The most important factor is that the sales price was 101.4% of the listing price, that confirms that overbidding was a strong part of the July market.  As has been the case with buyers all year, multiple offers are normal and overbidding is expect in many cases.  This should subside a bit as we get into August which is traditionally a slower sales month.

The typical home was on the market for 47 days which is longer than the 38 days for the same period last year and longer than the 29 days for last month.  However, this is tied to a couple of sales that had been on the market for a long time.  Newer listings have been selling quickly.  As old inventory clears out, you'll continue to see fluctuations in these figures.  Based on sales trends so far this year, I expect we'll see this as an anomoly for 2011.

There were 25 new homes for sale listed in July which is interesting considering that 27 homes were sold.  We only have about a 1 month supply of inventory in June so having a net drop of 2 units in July just means that the shortage of homes we've seen all year is getting worse.  This will continue to put pressure on buyers and sellers will still be in control.  August is traditionally a slow selling month so I would not expect to see a lot of homes place on the market.  This sets a tone for Q3 to show limited unit sales by climbing prices.  What I'm seeing with some buyers is they're going back to look at homes that were on the market months ago and trying to find sellers.  There have been a few homes taken off the market (expired and cancelled listings) that have come back.  That may be the only option for some buyers.

Speaking of expired listings, there were 27 in total but a lot of those got relisted fairly quickly by the original listing agent.  It's gotten very rare to see expired listings which is making the challenge of finding old inventory to buy even more difficult.

There was some discussion of how the reduction in jumbo loan limits would impact the high-end market.  The Los Altos market is immune to this sort of issue.  Most buyers are obtaining loans well in excess of the conforming loans.  Moreover, the interest rates are nearly the same comparing conforming and jumbo loans so buyers are not being saddled with additional payments.  Based on current market conditions, I expect we'll see sales continue to be strong.

The Los Altos real estate market is continuing to climb up with 14 homes sold so far this month.  That's pretty good considering we had a short week the first week of July and there was very little listing or selling activity in the days immediately preceeding or after July 4th.  Of course, these are homes that actually sold in June but are now closing.  With Los Altos home inventory down to a 1 month supply, sales volume is likely to drop in July with fewer homes to choose from.  18 homes have gone "pending sale" so far in July and there are a total of 33 outstanding pending sales so the final closed sales for July could be well over 40 for the month which is not a high for the year.

The average selling price is $1,640,914 which is down from June but still strong.  One home on Chester Circle really pulled the average selling price down.  It sold for $850,000 which is the lowest single-family home price in Los Altos for a long time.  Ironically, at only 917 square feet, it will help push the price-per-square-foot pricing up quite a bit.  Another sale on Farndon for $1,100,000 also helped pull the average down.  The remaining sales set to close this month should help balance these out and the overall average selling price for July should be higher.  Of the pending sales, 10 are priced at $2 million or more and one is well over $4 million.  The high-end market in Los Altos continues to perform very well with more and more sales well over the $2 million price point.

One interesting trend right now is that the sales price as a percentage of listing price could go over 100% this month.  The value of the homes sold so far this month is higher than the collective listing prices so if that continues with the remaining closings, this will show a strong confirmation of overbids and multiple offers being the new normal.  What this means for buyers is that they'll have to make offers that are as strong as possible and don't count on discounts.  That's one of the issues with buyers still, many are convinced that offers can be made at what can be considered a "lowball" level - 10-20% under the asking price.  The price trends in Los Altos do not support making those offers and succeeding.

The real estate market in Los Altos Hills has been very strong this year, up 13.3% in the first 6 months with a significant number of high-end sales pulling up the rest of the market.  Inventory has been light, new listings have come on at a normal pace, and buyers are being realistic with their offers.  The critical factor driving activity this year was a series of high-end home sales in the $4 million to $10 million range that gave buyers throughout the market the confidence to step up and buy.  However, it appears that several of those listings are being taken off the market.

In the past 60 days, 2 homes at the ultra high-end have been taken off the market, one on Vinedo and another on Old Trace Lane.  In addition, homes in the $3 million to $6 million range on Seven Acres, Finn, Olive Tree, and Magdalena have also been cancelled or expired.  This is bringing down the already low inventory as we head into the slower "end of summer" selling season.  Several of these homes were on the market over a year at a variety of prices.  So, what's going on?

Some of these homes will come on the market again at some point in the future.  It's not uncommon for homes in Los Altos Hills to be taken off the market for a month or two in order to get a "cooling off" period from the MLS.  They also may simply be marketed off market.  The other possibility is that they may actually be sold, and if so, it's very likely they're taken off the market to sell to someone who would rather keep their identity a secret.  Many high-end transactions are done outside the MLS to protect the confidentiality of the buyer.

I expect to see most of these come back on or be sold off market in the not too distant future.  The few homes in the $3-6M range that have come off will likely be back on as well.  I know that a few homes have been taken off the market and rented so the sellers can bring them back on in a year.  What this means for buyers is that sellers are not motivated to sell at a discount, inventory is limited, and prices are moving up.  There's room for negotiation but not as much as there used to be.  Sellers will wait for the right buyer as the market continues to improve.

Buying a home in Los Altos has been a challenge for many in 2011.  The market has gotten much more competitive, prices have risen, and the supply is leaving many home buyers struggling to find anything suitable before the end of the school year. This market trend report shows how the Los Altos real estate market has changed in the first 6 months of 2010 to the first 6 months of 2011.  I'll start with the average selling price comparison.

As you can see in the chart below, the average selling price in Los Altos has risen since January and remained strong throughout the year.  While there has been some fluctuation, generally we're up about 6-8% in most months.  On average, we're up about 6.4% in the first six months of 2011 and the trend does not show signs of slowing down.  A large part of what is driving price appreciation is the limited supply of homes.

Los Altos Average Selling Price - January - June 2011

When looking at the average selling prices in 2010, you can see that only January and March were better performing months.  In those months for 2011, there were sales of homes that had been on the market a long time and that sold are much lower than average sales prices.  They skewed the overall values.  The solid appreciation in values in the first half of 2010 resulted in an overall increase of 1.9% from 2009.  There was price weakness in the 2nd half that kept things down.  However, the inventory going into Q3 last year was much higher than now.  As a result, the limited inventory of homes for sale in 2011 will keep pressure on sales and prices.

Los Altos Average Selling Price - January - June 2010

Another good indicator of how the market is doing is inventory and units sold.  Right now Los Altos has a little over 1 month supply of homes.  That makes is a sellers market by anyone's standards.  However, the risk of having so little inventory is that buyers will stay away.  If that happens, we'll see inventory rise and prices stabilize.

Number of Homes Sold, By Month, in Los Altos for 2011

Number of Homes Sold, By Month, in Los Altos for 2010

There were 161 homes sold in the first half of 2010, compared to 143 homes sold in the first half of 2011.  While that may seem as if the market is software, there are substantially fewer homes available and fewer listings.  There have been 221 new listings on the market in 2011 compared to 277 new listings in the first half of 2010.  Those 56 additional listings meant less competition, more time to decide to buy, and fewer overbids.