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The Midpeninsula real estate market defied expectations in 2024, with home prices surging despite high mortgage rates. Driven by a robust tech market, cities like Palo Alto and Los Altos set record-high prices. Signs point to a potentially volatile 2025, however, as shifting market dynamics could temper the recent growth.
Here’s how the Midpeninsula closed out 2024 and ushered in the New Year:
Los Altos, Palo Alto see record-setting home prices
Among the Midpeninsula markets, Palo Alto and Los Altos experienced significant year-over-year price increases. The median price of single-family homes in Palo Alto reached $3.66 million, marking a nearly 10% rise from 2023, while Los Altos saw a 7% increase to $4.4 million. Menlo Park, in contrast, experienced a slight 2% decline in its median price. Both Palo Alto and Los Altos reached record-high prices on an annual basis.
Los Altos 2024 market highlights
- Single-family median home price hit $4.4M
- New listings increased 19%
- Home sales increased 30%
- Median days on the market: 8
- 27% of homes sold fetched bids $500K over asking price
- 29% of sales were all-cash transactions
Palo Alto 2024 market highlights
- Single-family meidan hom price hit $3.66M
- Homes sold an average of 4% over-asking price
- 17% of homes sold fetched bids $500K over asking price
- 34% of sales were all-cash transactions
- 10 home sales exceeded $10 million each, marking the highest number sold in a single year in city history
Los Altos led in both new listings and sales, with the number of single-family home listings rising by 19% and sales jumping 30% compared to the previous year. Homes sold quickly, with a median of just eight days on the market. Los Altos also had the highest overbidding prices for homes on the market. The city saw homes sell at an average of 7% over-asking price compared to 4% in Palo Alto and 5% in Menlo Park. Notably, 27% of Los Altos homes sold in 2024 fetched bids over $500,000 above asking, versus 17% in Palo Alto.
Palo Alto led the region in the percentage of all-cash transactions, with 34% of homes purchased without financing. Menlo Park followed at 31%, and Los Altos at 29%. These figures underscore the strong purchasing power of buyers in the area as well as strong demand from overseas, especially for Palo Alto.
Midpeninsula markets break seasonal norms
While August and early September showed signs of seasonal slowing, the traditionally quieter months of November and December brought unexpected activity. For the last quarter of 2024, the number of new listings increased by 5% in Palo Alto and 9% in Los Altos compared to the same period in 2023. The number of properties that closed escrow surged by 37% in Palo Alto and an astonishing 70% in Los Altos compared to the previous year.
High-priced transactions pushed median prices higher in the last quarter of the year, with Palo Alto’s median home price rising nearly 30% to $3.75 million, Los Altos’ climbing 13% to $4.8 million, and Menlo Park’s increasing 7% to $3.4 million. December bidding wars were common, with some properties receiving more than 20 offers. The resolution of election uncertainties and record-breaking tech stock performance drove buyer motivation.
Palo Alto’s ultra-luxury market hits historic highs
In 2024, Palo Alto recorded 10 home sales exceeding $10 million – reportedly the highest number in a single year in the city’s history and more than double the annual average of four sales over the previous decade ending in 2023. Interestingly, half of these properties were previously listed but failed to sell until 2024, often at reduced prices.
A $13.8-million home in Palo Alto’s Crescent Park neighborhood that had been on and off the market since 2013, for example, sold to an overseas buyer for $4 million less than the seller’s 2017 asking price but 8% above the initial listing price from more than a decade ago. Even in the ultra-luxury segment, pricing remains critical. Buyers, regardless of financial capability, respond to fair valuations.
What’s ahead: A market in flux?
Post-election years often bring rising real estate values, but the path is rarely straightforward. Midpeninsula home prices are at record highs, supported by a thriving economy and a robust stock market.
After two consecutive years of inventory declines following the 2021 pandemic peak, 2024 saw a rebound. This trend is expected to continue in 2025, with more listings hitting the market. As the season progresses, however, the market’s direction may hinge on the performance of tech stocks, making it unpredictable.
Looking ahead, several other factors also may shape the real estate landscape. Rising trade tensions, labor shortage tied to tighter immigration policies, as well as high financing costs could drive up construction costs, further widening the price gap between older and newer homes. Additionally, geopolitical uncertainties may impact demand from international buyers – particularly from mainland China, where buyers accounted for over a quarter of Atherton property transactions in 2024.
Navigating the midpeninsula’s 2025 real estate market will require discipline, strategy and adaptability. Buyers and sellers must prepare for potential turbulence as macroeconomic and geopolitical factors come into play. Both groups will need to balance ambition with realism to succeed in this dynamic environment.
Contributing writer Xin Jiang is a real estate agent with Compass in Palo Alto.
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