Palo Alto continues its meteoric charge and shows no sign of stopping. Inventory dropped 20% from May numbers last year while sales rose 6%, and under contract sales were up a staggering 60%. Days supply of inventory has gone from 81 days in May 2010 to 27 days for last May. This is a dramatic swing from a neutral market to a seller’s market. Newly hired executives, relocating, are driving the market.

South Palo Alto
South Palo Alto continues its teat with under contract sales up 47% and number of sales up 17% over the same time last year. Average price is up 7%, while the median rose 3%, indicating action in the higher price homes in the neighborhood. Average days on the market plummeted to 13 days for properties sold in May.

North Palo Alto
North Palo Alto, with its higher price point, has caught up to the heat experienced late last year in South Palo Alto. Under contract sales jumped 90% from May of last year. Anecdotally, June is seeing as many as 5-7 offers on properties in the $1,500,000 to $3,000,000 range, with some properties selling for as much as 20% to 30% over list price. We expect June statistics to show dramatic increases in average and medium prices.

Palo Alto Forecast
We see the market continuing to ratchet up into next year. Newly minted executives from the developing social network companies as well as established local players are chasing a dwindling inventory of homes. We anticipate a bit of leveling off in Palo Alto as price-shocked buyers lean toward the relative bargains in Menlo Park and Los Altos. Once those prices adjust to normal differentials, however, Palo Alto is poised to push forward again, as it is still considered the safe bet for moving into the area from far away. What’s next? The locals get back into the move-up market.