T
he Midpeninsula real estate market is experiencing a frenzy, with multiple records broken in the first quarter of 2025. The AI-driven tech boom is fueling this surge, pushing home prices to unprecedented heights. In Palo Alto, the median sales price for single-family homes reached $4.2 million, surpassing the previous peak set during the pandemic housing bubble.
Los Altos remains the hottest market on the Peninsula, with a staggering median sales price of $5.7 million, up 39% year-over-year and 29% above its pandemic-era high. The city's new listings increased by 32%, while the median days on the market remained at an astonishing eight days.
The Los Altos market is characterized by intense bidding wars, with seven out of 37 single-family homes sold for more than $1 million above asking price. This phenomenon is driven by strong demand for newer, move-in-ready homes on large lots and desirable streets. A prime example is a 3,600-square-foot home that sold for $1.4 million above list price in just two days.
Menlo Park's median home sales price increased by 19% year-over-year to $3.6 million, but the market remains less volatile than Palo Alto and Los Altos. The city's premium Central Menlo area saw a significant drop in new listings, with only 14 homes listed this quarter.
The speed of sales is at an all-time high, with homes staying on the market for an average of seven to eight days. This reflects a highly active buyer pool that completes due diligence quickly and moves decisively. However, not every home sells quickly, and some properties remain unsold due to factors like high-end pricing, undersized lots, or challenging locations.
Young tech families with school-age children continue to dominate the buyer pool in Palo Alto and Los Altos, placing a premium on four-bedroom homes. The data reveals a significant price difference between three- and four-bedroom homes, with a notable "fourth-bedroom premium" of approximately $800,000.
The recent decline in tech stocks has led to early signs of cooling in the housing market, but it's too early to conclude that prices will decline meaningfully. Market fundamentals remain strong, and prospective sellers should take advantage of record-high home prices while buyers focus on finding the right home rather than trying to time the market.
