Palo Alto Home Sales Statistics and Charts
Palo Alto, CA - Average Days On Market
Days-on-Market (DOM) tells you how long the active properties currently for sale, in aggregate, have been on the market (aka ‘time on market’).Show more ↓↓
Said otherwise, "Of the active listings currently available for sale, how long have they been for sale?" Compare this to Time to sale which is used to describe only those selected properties that sold and is a statistically different measurement. Time to sale only looks at those properties that sold vs time on market which looks at all active listings as defined above. Most importantly, while the values of the Altos Research DOM and the time to sale may not match, you'll find that these numbers are closely correlated. Both values will rise in weaker markets and fall in stronger markets.
The DOM number that you see here on altosresearch.com and in your Market Reports is a cumulative number: Sometimes listing agents will pull a listing from the active market and re-list the property in the near future–maybe a couple of weeks or months down the road. This is a common action for an agent to take if a property has been on the market for an extended period of time or if the property will have its price reduced. Frequently, this also resets the days-on-market number back to zero days in the local MLS search. By re-listing the property, it can appear to be new in the local market because new buyers in the market may not have seen the property previously. But, that doesn't really tell you what the true days-on-market value is in that market. To correct for that, we calculate DOM as a cumulative number, which means if a properties leaves the active market and is relisted again within a 90-day period, we assume that the property was never really off the market –more like it was taking a break.
Because local MLS boards have different rules for reporting market statistics and for relisting properties, using the Altos Research DOM number insures that you are getting a truly consistent and reliable count for DOM in your local market area.
Additionally, if you are comparing market areas that have different MLS Boards, using the Altos Research DOM allows you to compare markets consistently instead of trying to guess how one MLS area calculates days-on-market vs another MLS area. Finally, you can compare Average DOM to Median DOM. It is common for the Average DOM to be much higher than the Median DOM. If that is the case in your area, it means that new properties getting listed are selling faster than properties that have been on the market for a while.Hide ↑↑
Palo Alto, CA - Inventory
Inventory is simply real estate lingo for the number of homes for sale. This stat shows you how much supply is available in the market you are researching.Show more ↓↓
Inventory levels can ebb and flow frequently due to seasonal effects. There's usually more inventory on the market in the spring time as the natural rate of real estate activity picks up during this time of year. Alternately, there's generally less inventory in the Fall or Winter as real estate activity slows.
This can mean mixed things if you're a buyer or seller in the market, or a real estate agent working with your clients. At times when there is higher inventory, it means there's more selection for buyers. But there's also more buyers in the market in the spring time which means more competition for the homes on the market.Hide ↑↑
Palo Alto, CA - Market Action Index
Residential house prices are a function of supply and demand, and market conditions can be characterized by analyzing those factors. The Market Action Index (MAI) illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory.Show more ↓↓
An Market Action Index, or MAI, value greater than 30 typically indicates a Seller's Market (aka "Hot Market") because demand is high enough to quickly absorb available supply. A hot market will typically cause prices to rise. MAI values below 30 indicate a Buyer's Market (aka "Cold Market") where the inventory of already listed homes is sufficient to last several months at the current rate of sales. A cold market will typically cause prices to fall. Keep in mind that an MAI value close to 30 probably means that the local market is balanced or neutral. So if the MAI for your local market is somewhere between 27-33, then it's likely to be either a buyer's market or seller's market based on the individual street or home area that a particular property is in.Hide ↑↑
Palo Alto, CA - Median Price
The real estate industry generally uses Median Price instead of Average Price. The average or mean price is fairly easy to understand: sum of the prices of houses sold divided by the number of houses sold.Show more ↓↓
However, a couple of high end or low end properties in a single zip code or city can skew the Average Price pretty quickly. So using the Median gives a more accurate depiction of local price levels. For this, arrange the values of the homes sold in increasing order. The value of the home that is in the exact middle gives us the median value of homes in the area. If there is an even number of homes sold, take the mean of the two that fall in the middle of the range. Median Price is often a very good proxy for indicating real-time market activity. Sellers in a market, with the help of their local real estate agent, will price their home according to other similar homes in that market. While this isn't a perfect science, most agents and sellers tend to price their homes in close to the price where it will eventually sell. As the median price changes, this can indicate a couple of key market movements:
- A rise in median price means that sellers are responding to more sales in their local area which means that the local market might be strengthening or getting hotter – favoring sellers, so they will ask more for their home. A fall in the median price might indicate the opposite – few homes selling at the current price levels which causes homes on the market to drop their price and for new homes on the market to price more aggressively.
- A rise in median price could also mean that homes at the lower part of the market are selling and leaving the market. This means that the remaining homes on the market are at a higher price point, which causes the aggregated median price to rise.
Palo Alto, CA - Median Price Per Square Foot
Price Per Square Foot is a measure of value. Think of this stat as answering the question – How much house am I getting for my money?Show more ↓↓
Price per Square Foot is also very helpful to compare based on the general price zone in which you are buying or selling a home. Altos Research divides up the market into Price Quartiles. By looking at Price Per Square foot of homes based on your price zone, you can really get specific on how much house you're getting for your money.Hide ↑↑