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After a slow spring in both prices and sales activity, the Midpeninsula housing market is picking up again, mirroring the recent surge in the stock market.
While mortgage rates haven’t had much effect on home prices since 2023, the chance of future rate cuts now has buyers moving faster as many look to lock in homes, worried prices could climb higher.
Los Altos remains hottest market on Midpeninsula
Los Altos has outperformed its neighboring cities in both price growth and buyer competitiveness so far this year. The median home price in Los Altos rose 11% year-over-year to $4.8 million, far outpacing Palo Alto’s 5.4% increase to $3.8 million and Menlo Park’s 3.5% rise to $3.3 million.
With the fierce competition, homes in Los Altos are selling in a median of just eight days, forcing buyers to make decisions quickly.
Overbidding is also more aggressive in Los Altos, pushing prices an average of 6% above asking, compared with 4% in Palo Alto and 2% in Menlo Park.
A whopping 12% of Los Altos sales closed $1 million or more above list price, and nearly one-third closed by at least $500,000 over asking price during the first eight months of the year. Palo Alto saw just 3% of homes sell at $1 million above asking, while Menlo Park had none.
Los Altos saw 86 homes sell for above $5 million, or about 46% of all recorded transactions.
Strong price gains also have motivated more Los Altos homeowners to put their properties on the market. Inventory climbed 17% year-over-year, with new listings spiking 35% in July and August as homeowners responded to surging demand. Palo Alto saw a 9% increase compared to last year, and Menlo Park saw a 2% decline.
Palo Alto leads in ultra-luxury sales
While Los Altos dominated overall growth, Palo Alto set a new benchmark in ultra-luxury sales this year. The city recorded 18 sales above $8 million as of the end of August. Of those, 13 sold during the first half of the year, the most ever in a six-month period.
The previous peak was 11 sales in the second half of 2024.
What’s particularly notable is the speed of these transactions. Seven of those deals in the first half of the year went into contract within a week, a stark contrast to last year, when similar properties lingered on the market for an average of 47 days.
So which Midpeninsula markets saw more activity? fewer sales? higher price tags?
Here’s a look at sales activity for single-family homes in Atherton, Los Altos, Menlo Park and Palo Alto from January through August 2025 compared to the same time period in 2024 based on data from MLSListings.
• MEDIAN HOME SALES PRICES: Los Altos, Palo Alto and Menlo Park all saw their median prices jump. Los Altos, with a median price of $4.81 million, saw the biggest jump at 11%; Palo Alto’s median price ($3.82 million) increased 5.4%; and Menlo Park’s median price ($3.3 million) increased 3.5%.
• PENDING AND RECORDED SALES: Los Altos saw home sales jump 12% citywide, but sales exclusive to North Los Altos experienced a 9.5% dip. Palo Alto’s sales jumped 2.8%. Menlo Park and Atherton saw slight gains of .9% and 1.9%, respectively.
• LOS ALTOS: Pending and recorded sales reached 207, up from 184, in Los Altos. Palo Alto saw sales rise from 281 to 289. Menlo Park’s jumped from 216 to 218. Atherton recorded 55 sales compared to 54 the previous year.
• NEW LISTINGS (single-family & townhomes): Menlo Park (-3.2%) and Atherton (-5.4%) each saw fewer listings come on the market, while Los Altos (+16.2%) Palo Alto (+13.3%) saw increased activity.
• OVERBIDDING: Competition among buyers became more fierce in Palo Alto, Los Altos and Menlo Park. In Palo Alto, 3% of homes sold for more than $1 million over list price, and 22% sold for more than $500,000 over. Los Altos was particularly competitive, with 12% of homes selling for more than $1 million over, and 30% for more than $500,000 over. Menlo Park saw 6.5% of its listings sell for more than $500,000 over, but recorded zero sales at $1 million over asking price.
•ULTRA-LUXURY SALES: The sale of $8-million-plus homes jumped to 18 in 2025, with 13 sold in the first half of the year – the most ever in a six-month period. Old Palo Alto accounted for nearly half of these luxury transactions.
• DAYS ON MARKET: Homes in both Los Altos and Palo Alto stayed on the market for a median of eight days, unchanged from last year. In Menlo Park, homes stayed on market for a median of 11 days, also unchanged from last year.
-Information compiled by Xin Jiang
Old Palo Alto accounted for nearly half of these luxury sales. Inventory there is also rising, up 21% year-over-year. The top recorded sale this year was a 105-year-old home on a .6-acre lot that closed for $18 million.
In comparison, Menlo Park recorded 12 home sales above $8 million, and Los Altos recorded 11 during the first eight months of this year.
Market picks up momentum
By August, even high-priced or less ideally located homes were finding buyers, signaling renewed confidence. Larger, older homes on prime lots also attracted strong interest, especially when priced competitively.
Construction costs have kept land values stable since 2018, but the rise of backyard Accessory Dwelling Units is now boosting land prices by expanding the potential uses of residential properties.
Outlook
The Midpeninsula housing market remains one of the most competitive in the nation. Los Altos leads in price growth, Palo Alto dominates ultra-luxury sales, and Menlo Park provides relative stability at slightly lower entry points. With tech wealth continuing to fuel demand, the region’s home values are likely to stay on an upward path in the months ahead.
“But where are the teachers and police officers going to live?” -Mountain View YIMBY