The final numbers are in and the average sales price of a single-family home in Los Altos rose 9% in 2007. For those buyers who are waiting for a price drop, stop waiting. Prices will continue to rise in 2008. I'll make my estimate now that prices will rise 5-7% in 2008.
Why are prices so high and still rising when the rest of the Bay Area is dropping or holding steady? Simple - demand. There are effectively 19 houses on the market and only one that I know of coming on next week (there will probably be another 4-5 new listings next week). However, there are dozens of buyers looking for homes here because of the excellent schools and overall quality of life.
What hasn't sold are homes that are overpriced with stubborn sellers. Sellers will often have an idea of what their home is worth and will hold firm regardless of what else happens. Getting a home with a stubborn seller is difficult, if not impossible.
Most of the other homes that haven't sold are in poor locations or offer little room for improvement (small lots are a challenge).
If you plan to buy, do so before the end of February because March onward is when the buyers swarm and multiple bids occur. If you plan to sell, it isn't a bad time to list because there are a LOT of buyers out there.