If you’re shopping for a home in Palo Alto, you probably don’t want to put too much weight on the asking price you see on the Multiple Listing Service. Add 10% to 15% to it, however, and you’re in the ballpark. Among Silicon Valley cities, Palo Alto is one that has seen homes sold for above the asking price with amazing consistency over the past four years. In fact, in the last 46 months, only once was the average price paid for homes less than the initial asking price. That was in February 2011, when buyers paid 97.9% of the listing price. Other than that, it’s been substantial premiums all the way.
Let’s look at some numbers.
Rising percentages, year by year
In January 2011, the price paid for Palo Alto homes was, on average, 101.1% of the asking price. We noted the drop in February, and then the rest of that year averaged out at about 104%.
The premium amount began edging up in 2012, but not significantly. Looking at month-to-month figures, May’s 110.2% was the peak – and the only time in 2011-2012 that the percentage passed 110. Other months ranged from 105.1% to 109.7%.
As demand for homes grew in 2013, so did the premiums buyers were willing to pay to close the sale. Though January started off slow with an average of 101.1% of the list price paid for sold homes, the number skyrocketed in February to 113.4%, and it never really looked back. The percentage dropped below 110 only one other time, in September. The peak was 114.2% in March.
During the first 10 months of 2014, the increase has continued, with March, April and May home sales averaging more than 116% of the homes’ list prices.
Fewer homes selling fast
It appears that sellers are quite ready to part with their homes once an attractive offer comes across the table. Homes in 2014 are selling rapidly, spurred on in part by a reduced inventory coupled with what seems to be a stable number of interested buyers.
The average time Palo Alto homes spend on the market has dropped to 16.3 days through October this year from 36.6 days in 2011. The fastest-selling months of 2014 include May and July, where homes averaged 13 days on the market, and March, where homes sold, on average, in just one week.
It’s important to note that these trends are being seen in a market where the average square-foot cost of homes has jumped from $759 in January 2011 to $1,401 in October 2014.