The first quarter of 2016 started off slow, but the high sale prices and short Days On Market of 2015 seem to have returned.
In January and February, properties were staying on the market longer than the frantic pace of the past few years. Prices were generally flat versus a year ago. Move-up buyers finally had the chance to shop, as properties remained on the market 57 days (up from 26-38 days in Q1 2015). In January and February, buyers showed caution after the holidays amid the global stock market volatility (notably China’s) and a few notable Silicon Valley layoffs. Unlike the 2013-2015 period, home sale prices did not increase by double digits. Many people question whether this was the beginning of the end to a spectacular 5-year run of real estate appreciation.
We saw more offers being accepted with a contingency (even in Palo Alto), which usually indicates that there was less competition. In the most sought-after neighborhoods of Old Palo Alto and Crescent Park, there were even a few cases where buyers backed out of contract during escrow. This has been almost unheard of in the past several years.
As March began, the market picked up momentum. A brand new construction in Old Palo Alto set a record at $1,984/square foot for a house that has a full basement in Palo Alto. The 5,289 square feet house was beautifully built on a 10,000+ square feet corner lot and sold for $10,495,000. Suddenly, properties that had been on the market for 4 months started to sell, like 725 Center in Crescent Park, a 29-year old home on a large corner lot. Average Days On Market have dropped to 28 in March, almost twice as fast as January.
The market appears strong as the summer begins. The US stock market is just a hair below its 5-year highs. The traditionally quiet summer season will be busy with Chinese buyers in town. The market seems to be back to its high-energy days, which favors sellers and forces buyers to act swiftly.