Condos and townhomes are a great way to get a pulse on the Palo Alto real estate market. This segment tend to be more volatile than single family homes, so we can get a good feel for what’s happening in the market by looking at their inventory, sales prices, and general activity. This market behaved differently in the first and second half of Q2, thanks to the Facebook IPO.
In the first half of Q2, our local market reflected excitement about the Facebook IPO. In the runup up to the IPO, we saw a large uptick in available (and later, sold) properties, as many sellers decided to capitalize on optimism surrounding the IPO. 67% of the condos and townhouses sold in Q2 were sold before the Facebook IPO. Even with the increase in inventory, buyers were clamoring for these properties. And then, just as quickly as the excitement began, the condo market lost its momentum.
Let’s dissect the second half of Q2. As the market changed, sellers and buyers reacted very differently. Sellers suddenly became apprehensive about listing their properties. As the optimism (and Facebook stock price) dipped, fewer properties became available to purchase. Compared with 2011, inventory in the final weeks of the second quarter was almost 55% lower than it was at the same time last year.
Buyers, however, still clamored for properties. Condos and townhouses sold just as quickly as before the IPO -- and still sold, for the most part, above asking. Of the 14 properties which sold or went pending in the second half of Q2, only 3 lasted more than 20 days on the market.
In the pre-IPO excitement, sales activity increased. In the post-IPO hangover, sellers pulled back, while buyer activity remained constant, or perhaps even increased, despite the contraction in available homes late in the quarter. Right now, we find ourselves in a moment of low inventory and high demand. If you’re on the fence about selling your condo or townhome, now is a very, very good time to get premium price for your property.
Peter Giovannotto is the Palo Alto condo guru for Dreyfus Properties. Peter has created the only known Comparative Market Analysis tool to compare condominiums, townhouses, and homeowner associations in North Palo Alto. Find out more about Peter's condo analysis tools on his website: www.paloaltocondoinfo.com