Whether you’re a buyer, a seller, or an investor, it is always a good idea to get the lay of the land before you try to tackle a real estate market and move forward with a transaction. Thanks to a wild, three-year pandemic and an economy that seems a bit manic, everything — including real estate — seems to be up in the air regarding what is happening and what the future may hold.
Fortunately, those of us who have been in business, finance, and real estate for decades and have studied the trends have a bit of insight into what is likely to come. Read on for expert advice if you’re trying to figure out how to tackle today’s real estate market in Palo Alto.
The current state of the Palo Alto real estate market
You might hear from some that this real estate bubble is going to burst, particularly in Palo Alto and along the peninsula, where home prices are among the highest in the country. It cannot last, they say. Sure, the market probably will not continue to increase at the rate it has been for the last couple of years, but the experts all seem to agree that it is also not going to crash. We have already seen evidence of the market cooling off.
As Almanac News reports, inventory has remained tight in Palo Alto
and the surrounding areas, and demand has fallen even farther than supply, likely thanks to the continued interest rate hikes implemented by the Federal Reserve. Still, while more people seem to be holding onto their homes and fewer people seem willing to wade into the market, Palo Alto continues to command high prices. All of this is to say that the Palo Alto real estate market may be experiencing a bit of a slow-down, but it remains at record highs that don’t seem to be going anywhere anytime soon.
Still a seller’s market?
While in many areas of the country, we can still confidently say that it is a seller’s market (as prices remain high and interest rates are still at record lows comparatively), Palo Alto is a bit of a different story. Record highs don’t mean much in Silicon Valley, where profits, revenue, and returns on investments also remain consistently high. Income levels are on par with real estate in luxury areas of the peninsula, including in Palo Alto, with Stanford University and Stanford Medical Center both within the city limits and Google, Facebook, and Apple within biking distance.
Given the thriving location, Palo Alto real estate experiences consistently high demand and competition between buyers. However, we can say that the favorability in the real estate market
has shifted, ever so slightly, in favor of the buyer. The Federal Reserve is currently considering pausing the interest rate hikes, which is good news for mortgage rates, which are slightly better than they were at the beginning of the year. That reality, combined with the increase in demand for new construction, puts real estate seekers in a better position this year than they were at this same time last year. This has led to a rise in buyer activity. We have also seen an increase in business for marketing vendors
who offer services like professional real estate photography and luxury home stagers, which signals an impending rise in inventory, another bonus for buyers.
A closer look at the stats
According to the latest data from the California Association of Realtors
, existing home sales in Palo Alto have dropped by 25% since last year, primarily due to buyer hesitation. In addition, the median sales price has decreased by 22.8%, currently sitting at $3.1 million. Active listings are also on the rise by 44.4%, giving buyers more choices when it comes to finding the perfect property. That said, homes are still spending just eight days on the market before selling.
Considerations for buyers and sellers
What these shifts mean for buyers is not necessarily that home prices in Palo Alto real estate will drop, at least not over the long term, but that buyers have more asking power during negotiations. Buyers are now in a position to negotiate for more favorable pricing, coming in at the asking price or even below if contingencies are to be made. In fact, about 28%
of active listings have experienced reduced prices.
Sellers will now be more encouraged to accept offers and make concessions, given the fact that, as inventory continues to rise
, a buyer can move on to the next property if this one does not work out.
Is it worth investing in Palo Alto real estate?
While mortgage rates remain relatively and historically low, and inventory is rising slightly, Palo Alto is a strongly profitable real estate market to consider as an investment. As discussed above, while the market has cooled slightly, prices will likely continue to rise steadily in the coming years. Thus, an investor hoping to flip a property or rent it out on a short-term basis and eventually sell still stands to profit from this investment. Especially for luxury real estate, a Palo Alto investment property is worth looking into.
Work with a trusted agent
The most important step you can take toward tackling the housing market in Palo Alto is to work with a trusted and highly experienced real estate professional. Expert broker Gretchen Swall
has a strong background in business, having moved to the area from New York City, where she worked as an investment banker for 20 years. Today, she is a top luxury Realtor in Palo Alto and the surrounding areas, where she works hard to represent her clients — both buyers and sellers — in a hectic market and ensure that the entire experience is effortless for the client.
With a vast network of professional connections, insightful market knowledge, and a goal-oriented mindset, Gretchen Swall
is ready to help you buy, sell, or invest in Palo Alto
real estate. Reach out today!
*Header photo courtesy of Shutterstock