T
he Midpeninsula real estate market defied expectations in 2024, with home prices surging despite high mortgage rates. The tech-driven market propelled cities like Palo Alto and Los Altos to record-high prices. However, shifting market dynamics may temper growth in 2025.
Palo Alto and Los Altos led the Midpeninsula markets in year-over-year price increases. Palo Alto's median single-family home price reached $3.66 million, a nearly 10% rise from 2023, while Los Altos saw a 7% increase to $4.4 million. Menlo Park experienced a slight 2% decline.
Los Altos stood out with significant market highlights: the single-family median home price hit $4.4M, new listings increased by 19%, and sales jumped 30%. Homes sold quickly, with a median of just eight days on the market. Los Altos also had the highest overbidding prices, with homes selling at an average of 7% above asking.
Palo Alto led in all-cash transactions, with 34% of homes purchased without financing. Menlo Park followed at 31%, and Los Altos at 29%. The strong purchasing power of buyers and demand from overseas drove these figures.
The Midpeninsula saw increased housing activity in the last quarter of 2024, despite traditionally quieter months. New listings rose by 5% in Palo Alto and 9% in Los Altos compared to the same period in 2023. Properties that closed escrow surged by 37% in Palo Alto and 70% in Los Altos.
Palo Alto's ultra-luxury market hit historic highs, with 10 home sales exceeding $10 million each in 2024. This is reportedly the highest number of such sales in a single year in city history. Half of these properties were previously listed but failed to sell until 2024, often at reduced prices.
The path ahead for the Midpeninsula real estate market is uncertain. Post-election years often bring rising values, but the economy and stock market performance will play significant roles. As the season progresses, factors like tech stocks' performance, trade tensions, labor shortages, and geopolitical uncertainties may shape the landscape. Buyers and sellers must prepare for potential turbulence by balancing ambition with realism.
