2024 Palo Alto Real Estate Market Forecast

Vibrant, sunny Palo Alto is one of the most highly desirable communities in the country. The community attracts buyers worldwide with its proximity to technology industries, charming eclectic homes, and Stanford University and research center. The regional real estate market has been defined by demand and affluence, a trend that will continue to grow in the coming years.

Palo Alto and the rest of Silicon Valley consistently rank as one of the nation's most expensive real estate markets. However, although it is one of the highest priced markets, it is also one of the most resilient. This market is in demand due to jobs, limited space for housing supply, temperate weather, excellent schools, proximity to San Francisco and airports. Let’s look at what buyers and sellers can expect from the Palo Alto real estate market as we move into the end of 2023 and 2024.

The real estate market forecast for Palo Alto realtively quiet with both sellers and buyers on the sidelines as the region responds to financial and economic uncertainty. Home prices in Palo Alto and Silicon Valley hit a high in early 2022 before falling by about 15% by the end of that year. After the 2022 drop in home prices, 2023 saw them rise steadily throughout the year, but they have not yet rebounded to the market high point of the previous year.

As buyers and sellers look forward to 2024, Palo Alto’s market looks to be on the rise again, even if it is slower than the chaos in the early years of a strong, post-pandemic market. Those looking to invest in property can expect an annual profit return of about 6% based on current market trends. After home sales decreased due to volatility from late 2022 and early 2023 we are trending to a stronger market outlook for 2024.Reports indicate investors and homebuyers can expect steady profit and growth moving forward.

Palo Alto looks to be moving into a more neutral market space, favoring buyers and sellers equally for 2023. The sales-to-list price ratio for the Bay Area and Silicon Valley is just about even, at 101.3%. This means that homes are selling at just 1.3% above their listed price on average, keeping the market moving steadily for buyers and sellers through 2024. Buyers are unwilling to move into higher price points due to rising interest rates and market uncertainty. And sellers are reluctant to push for higher counter offer prices due to a desire to sell their homes quickly in a fluctuating market. These factors will continue to blend to keep the list price and sales price somewhat equal.

Rising interest rates have created what some experts have termed a “lock-in” effect. Homeowners who entered into a home mortgage agreement when rates were at historic lows at the onset of the pandemic and are locked into low, fixed-rate loans are reluctant to sell. This has created a low supply of homes within Silicon Valley which matches the lower supply of buyers keeping the market generally even overall. Per Multiple listing service record, this year there have been 4 homes to close escrow in Palo Alto’s luxury 7 million plus range during the first months of 2023, ranging from 7,050,000 to 18,000,000. While in the first several months of 2022 Palo Alto saw 13 homes close escrow in the same price category up to 13 million.

As with 2023, supply issues will impact the Palo Alto market in 2024, but currently we see the available inventory rising slowly. Still, new active listings in the lower price bracket will just barely be able to keep up with homebuyer demand. This creates a supply issue for potential buyers as the number of houses on the market does not keep pace with demand.

Homes showing the greatest likelihood to increase in value in the Palo Alto market are the low to medium range. Luxury homes valued at 7 million and more have been slow to  return. Homes valued at $4 million or greater were in massive demand when the Palo Alto market was at its peak in 2021 and early 2022, and  homes valued at $2 million and above, the low end for Palo Alto, showing sales growth of 17.7%.

After a slight decline with the erratic financial circumstances of late 2022, luxury homes have been slow to move in 2023. Comparing the first months of 2022 to 2023 Palo Alto has had a 70% decline in volume of closed property sales of 7 million and up as recorded in the Multiple Listing Service.  Still Palo Alto median home values per square foot are the highest in Santa Clara County.

Through 2023, there has been a level of uncertainty in the Palo Alto and Santa Clara County market. The volatility of the high-tech job sector made high end investors inclined to move some cash into real estate.  We have seen well priced property in the more modest ranges entice multiple and call cash offers. That said,  fluctuating interest rates and stock market conditions put the real estate boom on a slight pause, keeping a large percent of both sellers and buyers watching and waiting from the sidelines.

As we move into the summer 2023 opportunities will abound.  Connect with Katherine, an experienced Realtor for all your buying and selling needs. Katherine Hunt is a local real estate expert who is highly knowledgeable about the evolving Palo Alto housing market. Her team stays up to date on the latest market conditions to ensure clients receive the best service for their needs.

Katherine has worked in the Silicon Valley real estate market for over 20 years. You can see the success of her clients at HomesbyKatherine.com. With a focus on luxury real estate, Katherine has deep, expert knowledge of the homes and changes in the market. Contact Katherine to discuss your options - because, It All Matters