DeLeon Realty’s 2015 Quarter One Los Altos UpdateApril 3, 2015
Like most of the Bay Area, the housing market in Los Altos for the first quarter of 2015 has seen an increase in home values, however inventory levels are consistent but slightly declining. In the first quarter the median price for a single family residence in Los Altos is now $2,610,000, which is an increase of 10% from last year. This rate of appreciation is even more impressive considering that in 2014 there was 13% appreciation.
While the rate of Los Altos appreciation has lagged Palo Alto and Menlo Park over the last 2 years, it is still a healthy and sustainable rise and is being driven by an increase in demand for the spacious lots and family friendly lifestyle the town offers.
Some of the drivers of this continued appreciation include the downtown becoming more dynamic as stores and restaurants funded by Sergay Brin’s Passerelle investment group are now opening up, the increasing API scores of Los Altos High which is now approaching parity with Palo Alto High, and the relative value compared to Palo Alto, with buyers being able to get double the lot size for effectively the same price. Long-term we are bullish on Los Altos as techies, particularly those from Google, flock to this beautiful town, often preferring it to the greater expense and congestion of Palo Alto.
Over the last 10 years the neighborhoods that have appreciated the most with over 50% appreciation are North and Central Los Altos, appreciating more rapidly than the Country Club neighborhood and South Los Altos. We believe this strong appreciation will continue for North Los Altos, which benefits from the improving downtown and rise of Los Altos High, Central Los Altos, which indirectly is benefiting from the gentrification of Mountain View. We even project good appreciation in the Country Club neighborhood, which has a Los Altos postal address but is in unincorporated San Mateo county, and developers love working with the county, which allows more sq. footage and is easier to build in than Los Altos. We project below average appreciation for South Los Altos, particularly the neighborhoods with Cupertino schools. Most buyers have a preference for Los Altos schools and these are not the blue chip Cupertino schools, so this is a bit of a compromise for all buyers and this decreases demand.
Recent noteworthy sales include:
415 Covington – This beautifully done, newer home on ¾ of an acre jumped nearly a million dollars to $6.7 million by an all cash buyer. While our sale last year of a home for $5.7 million was at the time amongst the top sales in Los Altos, several more sales above that range have become more common.
Showing that contemporary architecture is in vogue and commanding a premium we have two sales of modern homes that did very well. 421 Mundell, new construction by the good builder Clarum, was in prime North Los Altos and jumped about $450,000 with multiple offers. Our listing at 1431 Topar in Country Club, a very contemporary take on a craftsman, jumped $670,000 even with only 2 bedrooms on the top floor, so not an ideal floor plan.
Whether an architectural style is trending in or out will impact future appreciation. I project that Mediterranean homes built 5-10 years ago with darker finishes and segmented floor plans will not appreciate as rapidly as a contemporary craftsman. The architectural style that is the future and will see good appreciation will be very contemporary homes such as the stunning home I sold for approximately $8 million on the border of Los Altos in the hills.
This trend towards contemporary architecture makes sense as this is the norm in Los Angeles and all of Australia, it should make its way to Silicon Valley. We are the epicenter of the world’s innovation so we need to move past traditional architectural styles and I am seeing this translated in the marketplace in the premium these two homes commanded.
On a more general note, a nice, updated ranch style home in North Los Altos tends to be around $3.2 million, about $2.65 in Central Los Altos, and about $2.2-$2.3 in Country Club or the Highlands.
To conclude our first quarter analysis, the $ per sq. foot for single-family homes in the 4 main areas of Los Altos are $1,302 for North Los Altos, $1,174 for Central Los Altos/South of El Monte, $984 for the South Los Altos Highlands, and $932 for Country Club.
We forecast a strong second quarter along with a strong 2015 overall. The second quarter traditionally offers more inventory to choose from and pent up buyer demand from the first quarter will continue to push prices upward, although at a lower rate than this pop we have seen in the first quarter. While Los Altos had a strong first quarter, both Mountain View, Menlo Park and Palo Alto saw a bit more appreciation, so Los Altos is looking like a relative bargain.
If you would like to learn more about the dynamics and nuances of what trends are causing inventory to decline and consequently prices to rise, please watch my first quarter update on the overall Silicon Valley market, or reach out to me or my Los Altos Specialist for more information.