The Ripe Buyer’s Market of Los Altos Hills
Offering award-winning schools, large estates, and beautiful views, Los Altos Hills is widely considered one of the best places to live in Silicon Valley. This sought-after community is even approaching celebrity status: Beyoncé rented a home in Los Altos Hills when she was in town for the Super Bowl, and several top tech executives live in the area. Perhaps one of the most outstanding selling-points is that the Hills maintains a rural and tranquil atmosphere due to the prohibition of commercial development.
However, buying in the Hills is sometimes daunting. For instance, if local buyers are interested in building, considerations must be taken. As its name suggests, the Hills holds many properties located on sloped lots. Depending on the type of lot and the grade of the slope, homeowners must build in accordance with certain building restrictions. These require the minimum lot size to increase with the slope of the land.
Additionally, because Los Altos Hills is dedicated to preserving its rural beauty, remodels and new constructions must meet specific criteria, such as boundary set-backs and fence height, and comply with open space easements (OSE). According to the Los Altos Hills General Plan, OSE are permanent easements that are meant to “protect and maintain those areas necessary to the integrity of natural resources and processes, with special emphasis on, but not limited to, the groundwater recharge and drainage system, open spaces vital for wildlife habitat, open spaces suitable for agriculture, and other areas of major or unique ecological significance.”
Although OSE may seem limiting, in most cases homeowners have plenty of freedom to build however they desire. Moreover, the local requirement that some land remain in its natural state guarantees that the Hills will maintain its beautiful scenery, therefore retaining its value.
The Los Altos Hills market has also illustrated some fluctuation, further throwing buyers off balance. In 2015, low inventory and consequent high sales prices sped up the market. This led to an oversaturation of listings in early 2016 as sellers sought to capitalize on the previous year’s trends. For instance, there were only two new listings in Los Altos Hills in December 2015, per the Multiple Listings Service. As is typical in the winter, sellers waited to put their homes on the market, so during January and February 2016, a total of 23 local homes entered the market, resulting in a total of 57 active listings.
This bombardment of the local market means that homes are now taking longer to sell, and when they do, they sell at more competitive prices. In January 2016, the average home in the Hills took 95 days to sell, up significantly from 59 days in January 2015. Also in January 2016, the average home sold 6.7 percent below list price. This is notably lower than in January 2015, when the average home sold 3.2 percent lower than list price.
At first glance, these statistics may put the current Los Altos Hills market in a weak light, yet this area is, on the contrary, an excellent opportunity for buyers. Reduced selling prices, increased days on the market, and inventory oversaturation have put buyers in a much better position to negotiate home sales prices. Additionally, homeowners will continue to see appreciation. Over the past two years, the average sales price for homes in Los Altos Hills has consistently increased from $3,129,398 in 2013 to $3,886,593 in 2015.
Though recent market data appears to show that the local market has slowed down, local homes are continuing to appreciate in the long-term. Now is the perfect time for buyers to take advantage of the 2016 market’s slow beginnings.
