Unquestionably one of the most prestigious neighborhoods in Silicon Valley, Old Palo Alto has a unique blend of spectacular architecture, large parcels, great public schools, and a central location that has made the neighborhood highly desirable to multiple generations of Silicon Valley’s most successful families. However, this area also feels like a sort of “New Palo Alto” since so many new homes are being built along its dignified avenues. This profile explores what trends are driving this neighborhood’s rapid appreciation and gentrification.
The wide streets of Old Palo Alto are lined with heritage magnolia and oak trees that provide a rarefied ambience reminiscent of the trophy estates of Beverly Hills and Pacific Heights. Architectural styles here are a seamless blend of Craftsman and Mediterranean Revival homes built in the 1920s and 1930s and residences boasting the refined modern architecture that is so coveted on the Peninsula. Indeed, the understated elegance of the homes and their lush landscaping are enjoyed by lucky residents who can stroll to nearby Gamble Gardens, several local parks, and the Lucy Stern Community Center. It should come as no surprise that this neighborhood is home to many of Palo Alto’s nine billionaires!
This neighborhood’s charm certainly comes at a price. Old Palo Alto homes in prime locations are approaching $2,000 per square foot of living space. An illustrative example is the recent sale of a Colonial-style home at 578 Lowell Avenue. This two-story home of 3,024 sq. ft. featured four bedrooms and three bathrooms, and was located on a 7,384 sq. ft. parcel. In April of 2015, it sold for $5,925,000, or $1,960 per sq. foot. Just three blocks away, an imposing 1916 estate on a rare 37,462 sq. ft. parcel sold last year for Palo Alto’s highest recorded sale of $19,880,000.
We project that Old Palo Alto’s appreciation will outpace other high-end Palo Alto neighborhoods. Interestingly, the area has no building restrictions beyond city building codes. Conversely, the adjoining Professorville neighborhood is a registered historic district with strict design guidelines, layered on top of the city’s building codes that necessitate design review and approval of improvements by the city’s Historic Resources Board, which precludes new construction and inhibits remodeling.
Another plus of Old Palo Alto is that the entire neighborhood is out of the flood zone that impacts much of Palo Alto. Consequently, homeowners can build a basement without having to include the below-grade square footage in the restrictive floor area calculations mandated by Palo Alto building codes. In contrast, much of Crescent Park, Palo Alto’s other top neighborhood, is in the flood zone where no basements are allowed.
These restrictions inhibit new construction and result in lower appreciation in other prime neighborhoods. As a direct result, Old Palo Alto has enjoyed an incredible 95% appreciation over the last ten years, in contrast to Crescent Park’s 64% and Professorville’s 43%.
Old Palo Alto’s luster will only continue to be enhanced as today’s class of tech luminaries compete for the tree-lined tranquility that this exceptional neighborhood provides alongside its stellar appreciation.