Palo Alto Homes, Palo Alto Real Estate, Palo Alto Realtor, Wendy Leung

With mortgage rates stabilizing in the last quarter of 2023, what's in for the 2024 housing market in Palo Alto?

Before looking ahead, let's take a quick look at how it went for last year. Overall, Santa Clara County (South Bay & Silicon Valley) saw a drop in the number of home sales by 23.47% from the previous year. Median home price is $1,480,000, a slight drop from last year’s, $1,485,000.

As for my home city, Palo Alto, It went down by 13% from 473 to 411 homes. However, Palo Alto is still one of the top three cities in San Clara County with the highest sale volume of $1.3b home sales. The median price in 2003 was $3,050,000, 7.58% lower than in 2022 which was at $3,300,000. However, most homes sold at an average of 2% over the listing price, demonstrating continued demand. Inventory was tight last year with homes selling relatively fast at an average of 28 days, albeit a week longer than the previous year. Currently, we have only about one month of inventory on the market.

Palo Alto's multiple offers have softened in 2023 with a small number of well-priced homes getting a few offers but not at the frenzy level as 2021 and 2022. The Fed rate hikes in 2022 continued well into the summer of 2023, pushing mortgage rates from 6.5% in early 2023 to 7.79% in Oct. Last quarter was a welcome change when the FED paused raising the rates in July. This resulted in 30 year fixed mortgage rate dropping for the last 8 consecutive weeks ending at 6.61% on December 28.

With inflation largely under control and the FED projecting three cuts in the new year, we can expect a better outlook for 2024. NAR is anticipating mortgage rates to fall to 6% by the end of the year, while financial analysts and lending industries are feeling more optimistic that it will go below 6%.

As for Palo Alto, I believe inventory will continue to be tight and we are most likely going to see shorter days on the market than last year. With the FED projected cuts this year, homebuyers who were sitting on the sidelines will feel encouraged to start their search this year. It could boost home sale levels higher than last year. We will probably still see average sold prices go above the listing prices by a few percent.

As the saying goes for predictions, it's just a prediction, there are still many factors that could influence the housing market that are beyond our control. We can only remain hopeful that this year is going to be a better one than the last!

Wendy Leung
Compass
DRE 02223900

(Data from California MLS, are deemed reliable but not guaranteed.)