Some real estate agents always say “the market is great” or “great time to buy” or “great time to sell”. Informed consumers of real estate understand all proclamations of this type must be taken with a grain of salt. Altos Research tracks real estate markets across the country. They do not sell real estate, they provide real estate data.

For detailed information on Altos Research’s methodology: what market statistics they track and how they analyze the data.

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The Market Action Index (MAI) measures the strength of a local market by looking at the number of home sales versus inventory or number of homes for sale.

30 is considered a balanced market.

Above 30, seller’s market. Below 30, buyers’ market.

One can see that from June 2010 to March 2011, MAI was 22 to 24 – buyers’ market.

Since March 2011, MAI has gone from 23 to 36.

This is a significant move towards a sellers’ market after buyers’ market from January 2008 to March 2011.

For a longer term view of the Market Action Index in Palo Alto, please review the chart below.

What segment of the market is the strongest?

Here is median MAI for Palo Alto broken down into 4 price ranges.

The four price quartiles have average prices of $4.0M, $1.8M, $1.3M, and $1M.

The highest price quartile in Palo Alto was the weakest in 2010 while the two lowest quartiles were the strongest in Palo Alto. Since January 2011, the highest price range has gotten much stronger like the other price ranges in Palo Alto.

This data indicates that Palo Alto is now a seller’s market. Buyers looking for homes in Palo Alto will face stiff competition.

Let’s review the Palo Alto real estate market by looking at various market metrics over the past two years.

All data is for single family homes.

We can see the median price for single family homes in Palo Alto in most price ranges has been flat to slightly declining over the past two years. I do not give much weight to the fact that the median price at the highest price increased in the 4th quarter of 2010. I believe this to be an aberration.

Let’s drill down deeper and look at the median price per square foot of living area over the past two years.

 This data indicates that in general the median price in Palo Alto dropped during 2009 but increased in 2010. The median price per sf at the end of 2010 was approximately at the same levels as it was at the start of 2009.

Let’s look at inventory levels in the Palo Alto real estate market.

We see the typical trend of low inventory at the start of each year – increasing thru spring – peaking in summer and the declining for the balance of the year. It is intersting to note that inventory levels in 2010 were generally lower than inventory levels in 2009 in Palo Alto.

The final metric to be looked at is the market action index. 30 is considered a balanced market. Below 30 is considered a buyer’s market. Above 30 is a seller’s market.

It is interesting to note that the highest price range in Palo Alto – ie the black line – has the lowest Market Action Index – meaning the highest price range was the weakest segment of the Palo Alto market over the past two years.

This data indicates that the lower the price range in Palo Alto, the stronger the market. This is good information for “entry-level” buyers who want to get into Palo Alto and their outstanding schools – be preapred for a competitive buying process.

In the two lowest price ranges, the MAI is around 25 – so still a buyer’s market but only a weak buyer’s market.

My sense is that 2011 will bring more of the same for the Palo Alto market but only time will tell.  Despite the fact that I have been selling Palo Alto and Menlo Park real estate for over 32 years, I understand one can not predict the future.

The following data will show that single family home market in Palo Alto saw a very good second quarter 2010 (Q2 2010).

Median price up 2.8% to $1,499,500 from $1,410,000
Average price up 9.4% to $1,685,380 from $1,541,200
Number of Palo Alto homes sold up 76.1% to 118 from 67
Number of pending sales of Palo Alto homes up slightly 2.6% to 39 from 38.
Days on market down 45.3% to 34 days from 64 days.

As we see in Menlo Park, Q2 in 2008 and 2009 has been strong in Palo Alto also.

Median price in Menlo Park jumped 29.8% compared to Palo Alto’s 2.8%.

Let’s take a look at the Palo Alto single family home real estate market over the past 2 years and see what is going on.

In October 2008 – right about the time of the stock and financial market collapse, the Palo Alto real estate market took a big hit.

In October 2008, median price in Palo Alto was $1.9M. Over the next year, median price in Palo Alto dropped to $1.6M around October 2009. Since that time, median price has held fairly level with an increase over the past few months.

In October 2008, average days on market was about 45 and rose steadily all the way up to 170 in April 2010. In the past few months, average days on market has dropped to 110.

Again, we see signs of recent improvement.

The market action index measures market strenght – 30 is a balanced market, below 30 is a buyers’ market.

The market action index in Palo Alto in October 2008 was 27 – almost balanced – and then decreased steadily to 17 – a buyers’ market in April 2009 and has now increased to 24 at the current time (July 2010).

These graphs clearly show the hit the Palo Alto real estate market took with the world financial problems that occured in October 2008.

It appears that it has taken about 18 months for the Palo Alto market to recover.

So there are some optimistic signs for the Palo Alto market.

The question remains: “Is this the start of a steady trend upward or will we see a “double dip” as many pundits suggest?”.

Stay tuned……

To see closed sales data for Palo Alto – for the entire city or for specific neighborhoods, please click here.

Data can be displayed for whatever time period you wish. Check it out!

9 new single family home listings came on the market this past week in Palo Alto.

To view these new listings in Palo Alto, click here.

11 single family homes in Palo Alto went pending sale this week.

101 single family homes in Palo Alto are currently for sale.

48 single family homes in Palo Alto currently have pending sales.

47.5% pending to active ratio in Palo Alto.

For Palo Alto market data, click here.

Tracking recent monthly sales data in Palo Alto, Menlo Park, and San Carlos indicates the real estate market is getting stronger and more competitive for buyers.

I have been tracking percentage of sales at or above list price since the start of the year.

Data for the first four months of the year can be found here.

May 2010 Sales at or above list price

• 30.9% in Menlo Park, down from April’s 36.6%.
• 57.4% in Palo Alto, up slightly from April’s 56.2%.
• 75.0% in San Carlos, up from April’s 70.0%.

May 2010 Average Days on Market

• 40 average days on market in Menlo Park
• 27 average days on market in Palo Alto
• 14 days on market in San Carlos

Both metrics indicate the San Carlos market is stronger.

I am interested in why the data is different between these three cities.

Any ideas as to why this is happening?

San Carlos homes are at a lower price point than homes in Palo Alto and Menlo Park.

Perhaps the data indicates higher demand in the more affordable price ranges.

I will need to take a closer look, at the raw data below.

Menlo Park May 2010 sales data

Palo Alto May 2010 sales data

San Carlos May 2010 sales data

How’s the Market in Menlo Park?

How’s the Market in Palo Alto?

How’s the Market in San Carlos?

Transfer taxes on the sale of real property are collected by San Mateo, Santa Clara, and San Francisco Counties.

These transfer taxes are paid in escrow and are part of buyer and seller closing costs.

Typically, the County transfer tax is $1.10 per $1,000 of value and are generally paid by the seller.
So upon sale of a $500,000 house, the seller will pay a transfer tax of $1.10 x 500 or $550 to the County.

Some cities also have City transfer taxes.
On the San Francisco Peninsula; San Francisco, San Mateo, Palo Alto, Mt. View and San Jose have City transfer taxes.
Generally, city transfer taxes are spilt 50/50 between buyer and seller.

The City transfer tax in Palo Alto, Mt. View, and San Jose is $3.30 per $1000 of value.
So on a $500,000 sale in these cities, the City transfer tax is $3.30 x 500 = $1650.
Buyer pay $825. Seller pays $825.

The City transfer tax in San Mateo is $5.00 per $1,000 of value.
So on a $500,000 sale in San Mateo, the City transfer tax is $5 x 500 = $2500.
Buyer pays $1250. Seller pays $1250.

So if you are buying or selling in those cities, be sure to take into account these City transfer taxes.

21 new single family home listings came on the market this past week in Palo Alto.

To view these new listings in Palo Alto, click here.

11 single family homes in Palo Alto went pending sale this week.

91 single family homes in Palo Alto are currently for sale.

61 single family homes in Palo Alto currently have pending sales.

67.0% pending to active ratio in Palo Alto.

For Palo Alto market data, click here.

Every parent wants to send their children to excellent schools.

School rankings play a big role in property values – the better the schools – the higher the property values.

2009 API scores have just been published and no surprise:

Menlo Park, Palo Alto, and San Carlos rank very well.

Click on City below to see API scores for each school in the City:

Menlo Park

Menlo Parks shows an average API of 931 with a low of 918 and a high of 940.

Palo Alto

Palo Alto shows an average API of 919 with a low of 861 and a high of 982.

San Carlos

San Carlos shows an average API of 896 with a low of 861 and a high of 917.

Sequoia Union High School District (which covers Menlo Park to Belmont)

High schools in this in this district have API scores from 740 to 827.

On April 10, 2010, I wrote a post “How common are sales prices above list prices?”

My analysis of sales data in Menlo Park, Palo Alto, and San Carlos indicated that in the first three months of 2010:

38.3% of the homes sold and closed in Menlo Park sold at or above list price.

46.5% of the homes sold and closed in Palo Alto sold at or above list price.

51.3% of the homes sold and closed in San Carlos sold at or above list price.

What happened in the month of April 2010?

36.6% of the homes sold and closed in Menlo Park sold at or above list price.

56.2% of the homes sold and closed in Palo Alto sold at or above list price.

70.0% of the homes sold and closed in San Carlos sold at or above list price.

The number of home sales above list price increased in Palo Alto and San Carlos during April 2010 above the first three months of the year. Clearly, the market in those two cities is heating up.

The number of homes sales above list price in Menlo Park remained unchanged at about 36%.

To view historical sales data by city or by neighborhood on a monthly, quarterly, or annual basis, click below:

Menlo Park Sales Data

Palo Alto Sales Data

San Carlos Sales Data