Annual Real Estate Market Snapshot – SF Peninsula & Silicon Valley

How 2013 compared to 2012, 2008, and 15-year Averages


Heavy demand in a recovering economy is nothing new. What was unusual in 2013 was the extremely low number of homes for sale! This is due to several factors. The greatest contributing factor is state and federal tax policy. At the state level, “Prop. 13” (passed in 1978) essentially freezes property tax rates based upon its sales price. Prior to the passage of Prop. 13, folks would often trade up or down as their circumstances changed. This occurs much less frequently now.

Today most owners will stay in their home and add on or remodel, as needed, rather than risk increasing their tax basis by buying a more expensive home. At the federal level, the IRS allows owners to leave their primary residences to their heirs at the “stepped up basis” (current market value). Thereby, both the home owner and their heirs avoid capital gains taxes on the property. These tax policies encourages the elderly to stay in their homes. Instead of moving into a senior facility many seniors are now bringing help into their homes instead. In fact, the “in-home care” industry is growing rapidly, due to this trend.

In the tables below, you’ll find 15 years of data for market activity and median sales price for the Year 2013 for Palo Alto, Los Altos, Los Altos Hills, Menlo Park and Mountain View. You can’t find this level of historical data all in one place anywhere else, so if you have any questions or wish to get more info about your community, don’t hesitate to contact us.


Homeowners tend to stay put when the value of their property is rising. Those who are thinking of moving tend to wait until signs appear that property values are starting to decline. At that point in the cycle, we typically see a terrific increase in the numbers of homes for sale. Lastly, people are simply living longer.

Adding up all of these factors, it’s easy to see why we have record low numbers of homes for sale. Demand for homes in our area will most likely continue at a heated pace and inventory of homes for sale will remain low until the next financial shock occurs.

The towns included above have diverse neighborhoods and prices. When we look at averages we get clues to the overall market, but not the details. If you would like an in-depth analysis of market trends in your particular town or neighborhood, simply call Jeff at 650.823.8057 or Steve at 650.450.0160, or email us: We’ll be happy to help!