Palo Alto: Month in Review - April (May 10, 2010)

Last month we started the Month in Review article with these words: “The median price of Bay Area homes rose drastically over the past year.  Palo Alto once again shows a strong demand for houses – multiple offers are not uncommon today.”  Well, the trend continues.  The April median price rose 12% over March of this year and a  whopping 27% over April 2009.  We’re only 7% below the all-time highs we experienced in 2007 and 2008.

The volume of sales is also on the rise.  April delivered a 19% increase in sales comparing with March 2010 and 11% over April 2009.  Judging by the number of pending sales, the upswing is not over yet.  As of May 1^st there were 63 properties under contract — a leading indicator for May sales.

April sales may have benefited from the now expired federal tax credit, as homebuyers rushed to take advantage of it while it was still available.  With the federal tax credit gone, the California tax credit is becoming a major factor influencing buyer behavior.  Even though $10,000 does not seem like much comparing with home prices in the area, we saw people delaying transaction closure in order to use this credit on several occasions.

Inventory is also going down as the number of sales exceeds the number of new listings.  A year ago we had 229 properties available for sale during the month of April; this year only 132, a 74% drop.  Inventory was growing a bit over February and March — a sign of a healthy spring selling market with sellers trying to take advantage of seasonal trends.

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