Palo Alto
One of the addresses on the Peninsula east of 280, Palo Alto has the credentials to back up that prestige…but you pay.
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View Palo Alto in a larger map |
Abbreviated map of Palo Alto, showing main residential areas and environs. Map boundaries are approximate due to my limitations as a map maker. See index of Palo Alto neighborhoods below for neighborhood maps. Boundaries and other information on this Web site should be verified before being relied upon. |
pros
and cons
pros
· Highly-regarded school district, from K through 12.
· The mid-Peninsula’s only regional downtown, plus a second downtown that’s the equal of many neighboring downtowns, plus a shopping district that gives the Midtown area its focal point.
· Twenty-nine parks, including 1400 acres in the foothills open only to Palo Alto residents.
· Three community centers: Lucie Stern, Mitchell Park and Cubberley. Lucie Stern and the surrounding buildings and park are perhaps the most beautiful and elaborate community facilities on the Peninsula.
· One main library, and five branches including a children's library.
· An incredible array of city-sponsored programs for adults and children.
· City-owned utilities include electric, fiber optic, natural gas, water and sewer.
· City encourages citizen participation in community decision-making (“the Palo Alto process”).
· A wide variety of neighborhoods, including some of the most distinguished on the Peninsula, as well as some that are relative bargains.
· The long-time cultural, intellectual and economic influence of a leading university.
cons
· Although Palo Alto offers much, not everyone thinks it’s a “bang for the buck” real estate market. This sometimes creates the perception that Palo Alto is overpriced. That’s an argument no one’s going to win, since value is subjective, but the corollary to this perception, that only fools and snobs pay "inflated Palo Alto prices", ignores the fact that buyers act extremely rationally when spending this kind of money. Strong demand for Palo Alto isn’t a dot-com fluke. Enough buyers have voted for Palo Alto with their checkbooks, not just in March 2000 but over the years, to keep the city selling at a premium. Yes, Palo Alto prices go down as well as up, but anyone who's waiting for this city to start selling at the slower pace of less-sought-after cities like Fremont or San Jose is an incurable optimist.
· But you may not agree that what Palo Alto offers is worth the premium, particularly if you judge a city just by how much house or neighborhood you can buy. There’s no doubt that you can get a larger house and perhaps a more attractive neighborhood in neighboring cities for the same or less money. You may even get high-scoring schools and an attractive downtown. You just won’t get the complete Palo Alto package. See Neighboring Cities for alternatives.
· Palo Alto is a tough place for buyers, even in a normal market. In a hot market, Palo Alto rockets off and reaches a higher orbit. Palo Alto is one of the two or three most competitive real estate markets on the Peninsula, itself an extremely competitive market. So what does "extremely competitive" mean in plain English? It means that "I'd like to live in Palo Alto as long as I don't pay too much" loses every time to the one buyer in five, ten or twenty whose mantra is "whatever it takes, I'm going to buy in Palo Alto". Whether real estate is hot or cold, the harsh reality is that buying in Palo Alto has become like getting into a top university: it takes an exceptional drive and willingness to sacrifice that, by definition, only a few people have. That's what "extremely competitive" means: many are called, few are chosen.
· Be wary of an agent who claims to know Palo Alto but needs a map to get around it, even if she gets around in a Mercedes. At the risk of sounding provincial, Palo Alto is the fast lane of local real estate. Any town with a regional, national and even international reputation as a great place to live will have different rules, higher expectations and faster action. The way real estate is bought and sold elsewhere won't cut it here, and experienced Palo Alto listing agents know that.
· Part of the considerable Palo Alto mystique is the claim that it's a better investment than its neighbors. Buyers and agents say it gains value faster in a hot market and holds its value better in a declining market. Unfortunately, the numbers going back to 1992 say they're only half right: Palo Alto takes off faster and harder in a hot market, but it comes down just as hard and fast when the market slumps. It's called "reversion to the mean", but apparently most people only remember the thrilling ride up. That's a useful insight into market psychology but not into the Palo Alto market. Until they find oil in every Palo Alto backyard, buy here because it's a wonderful place, not because it's a bullet-proof investment.
· Prices have excluded worthy people who would add to the city’s mix. The plumbers and police officers who once could buy a modest home in an affordable Palo Alto neighborhood have been commuting from Modesto for years.
· Those looking for the Los Altos or Central Menlo ambience of an upscale ranch-style home on a quarter-acre lot won’t have many options in Palo Alto. Leland Manor is it, and while other neighborhoods come close, Palo Alto isn’t for the land-hungry on a midrange budget.
· Like any affluent city, Palo Alto has a reputation for snobbery. I’m thinking of a short-lived marketing campaign for downtown Redwood City that featured the slogan “Palo Alto without the attitude”.
· Have I mentioned that Palo Alto is a tough, competitive market for buyers?
Interested in buying a home in Palo Alto? Please contact me at jfyten@cbnorcal.com.
neighborhoods
Click on each of these Palo Alto neighborhoods for an in-depth look.
price
performance
Here's how Palo Alto's major sub-markets have performed since 1994. Top-end Palo Alto consists of California Avenue, College Terrace, Community Center, Crescent Park, Downtown, Evergreen Park, Leland Manor, Old Palo Alto, Professorville and Southgate. Some of these neighborhoods also have a varying amount of entry-level housing. Entry-level Palo Alto is almost everything else, generally the tract neighborhoods built after World War II: Barron Park, East Charleston, East of Midtown, Green Acres, Green Gables, Midtown, Monroe, Ventura and West Charleston. The Palo Alto Hills isn't included here, since its ultra-top end prices are more typical of Los Altos Hills et al. Palo Alto CID (Common Interest Development) includes all condos and townhouses, regardless of area. This graph is based on data from the Multiple Listing Service, corrected to eliminate anomalies at both ends of the price range that skew average sales price. The data has also been adjusted to compensate for the often substantial differences in average property size from year to year that can also skew averages. In effect, we're tracking a condo of 1252 sq.ft., an entry-level neighborhood SFR of 1700 sq.ft. and a top-end neighborhood SFR of 2038 sq.ft. through eighteen years of boom and bust (twelve in the case of the condo). The base year, 1994, was the last year of the post-1989 bust (note that there is no 1994 data for CID). 2000 was the dot-com peak, Q4 2001 the bottom of the dot-bust. 2005 is often called the recent market's peak, although the Palo Alto market peaked in early 2008. 2011 data is through August 31, 2011 and shows significant price increases over 2010.
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Palo Alto estimated average annual appreciation |
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| area or type | 1994-8/2011 | 2000-8/2011 | 2005-8/2011 |
| condos and townhomes | n/a | 1.7% | .2% |
| entry-level SFR | 13.7% | 3% | 1.7% |
| top-end SFR | 13.3% | 1.5% | 2.6% |
| S&P 500 | 8.9% | -1.4% | .2% |
| Nasdaq | 13% | -3.1% | 3.3% |
useful
links
updated May
2009
introduction
businesses and organizations
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public services
dining, shopping and entertainment
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history and landmarks
schools
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International School of the Peninsula (French-American and Chinese-American bilingual) |
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