October and November were exceptionally strong months for real estate activity in Pacific Union’s Silicon Valley region. Sales dropped off markedly after the last week of November due in part to the Holiday season. So December was as slow as the previous months were busy. Inventory remained flat throughout the quarter, down 30% from last year. While the average sales price continued rising by 20 – 27% over last year. Many homes attracted multiple offers from buyers, but not at the levels seen in previous quarters. Overall, buyers started to regain some control on the market, holding back on bidding for overpriced homes. Not so for the start of 2015 however. Not only do we have new buyers coming into the marketplace but all the buyers who did not buy in 2014 are still looking. Recently a home in Menlo Park that was on the market for $1,295,000 had 33 offers.
With home prices in Palo Alto, Menlo Park, and nearby communities starting at $2 million and $3 million, we saw a migration of buyers — first-time buyers in particular — to more affordable areas such as Redwood City and San Carlos, where improving schools and more vibrant down towns have helped increase their desirability.
Looking Forward: With hope we expect business of real estate to pick up again in January in the form of rising inventory levels. With low interest rates, the Bay Area’s strong economic growth and jobs report as well as the New Year it might be a win win for both buyers and sellers alike. If there is an interest rate hike later in the year buyer demand could drop off regulating the supply and demand side of the equation in a more favorable light.