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Los Altos house prices have wobbled around a fairly steady increase rate for 12 years. The rate has declined slightly in the last few years but is quite close to the Santa Clara County house price trend.
The Los Altos Hills house price trend shows a greater slowing in the last few years.
Ken Rosen, the chairman of the Fisher Center For Real Estate, at Berkeley’s Hass School of Business, talked recently about future real estate trends. Two points stood out: 1.) The old paradigm of low interest rates is not going to return in the foreseeable future. 2.) The doubling of debt service costs and cap rates has decreased values and now may be the best opportunity to buy real estate below replacement costs we’ve had since the early 1990’s.
Los Altos House Prices
Los Altos real estate trends show relatively flat house prices after the price drop at the beginning of 2022. The drop in values Dr. Rosen talked about doesn’t apply to Los Altos houses. However, he also brought up replacement costs. The increased financing cost and increased cost of materials has brought the construction of new market rate apartments to a halt in San Jose. Replacement costs have discouraged builders from starting new housing projects. With neither interest rates nor building costs likely to decrease, waiting for change before trying to achieve your housing goals is not likely to be a good plan.
Real estate economist Ken Rosen on YouTube.
The Los Altos Hills average size of houses sold reached an all-time quarterly high on Aug 18, 2023.
However, the average size of Los Altos homes sold was at the lower side of recent trends.
What makes this catch our attention is that the average house size for eight San Mateo County cities (Foster City, Menlo Park, Millbrae, Pacifica, Portola Valley, San Carlos, San Mateo, and Woodside) and for Palo Alto spiked upward to their highest-ever quarterly values. The trend was so broad that the San Mateo County average size of houses sold also reached an all-time high.
Although no reason is known for the spike in the average size of houses sold in San Mateo County, it appears that Los Altos and Los Altos Hills are probably not similarly affected. Learn more about Los Altos real estate.
Perhaps now is a particularly good time for first time home buyers to buy a condo.
In our 2021/01/09 webinar & our 2021/01/10 Chinese webinar we pointed out a difference in Silicon Valley real estate trends for houses vs. real estate trends for condos. House prices have been climbing a little faster than condo prices.
The incoming Biden administration has talked about a $15,000 tax credit for home buyers. The home prices in Silicon Valley are high enough that the credit will be more meaningful for condo buyers. With the difference in price between houses and condos recently increasing, and a potential tax credit driving up demand, buying a condo now could prove to be an even better than the normal choice for first time home buyers. Rent vs. Buy considerations, and low mortgage interest rates, make owning any home significantly better than renting for most Silicon Valley residents.
Condo owners are typically younger and more mobile than the average home buyer. The spread in house vs. condo prices is probably a short term reaction to the pandemic.
Very long term trends are still likely to favor homes with yards over homes without yards. New construction in Silicon Valley is nearly always townhouses and condos because of the high cost and limited availability of land. The expected increase in homes with little or no yard probably won’t keep up with demand, so all prices are likely to rise, but the number of homes with yards is likely to decrease as older housing is replaced with newer housing. Your own private outdoor space is slowly headed towards becoming an expensive luxury.
Buying a condo now should be an excellent path towards owning a bigger home in the future.
There have been a few reports (without data) that the corona virus pandemic is leading home buyers to prefer larger homes with larger lots. In Silicon Valley the city of Los Altos is known for having lots larger than most other Silicon Valley cities.
Comparing house sales price trends for Los Altos to downtown Palo Alto does not yet show any change in preferences. Prices have been relatively flat since the beginning of 2019 for both areas through the end of November 2020.
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