Real Estate Investment in Palo Alto, CA

Why Invest in Palo Alto, CA Real Estate?

Palo Alto is one of the hottest markets in the United States for real estate investors. With great weather, flawless infrastructure, delightful nature, year-round leisure ops, cultural diversity, and home to many innovative companies, the city attracts a lot of potential renters and tourists every year. There's a plethora of single-family homes and multi-family properties in Palo Alto. While the prices are higher than in other neighboring areas, Palo Alto's real estate market is always busy trying to accommodate the exceptionally high demand. Synonymous with innovation, Palo Alto is the heart of Silicon Valley. There are both world-famous corporations and brave start-ups headquartered here; this leads to new jobs, ideas, and revenue. The city's ever-growing and solid economy is grounded in key industries like professional services, technology, and scientific services. This translates into a continuous interest by domestic and foreign renters and buyers, hence there's an ongoing strong demand for real estate investors.

Investment Considerations for Palo Alto Real Estate

There are a number of factors to consider, including:

  • Job Market Growth - n 2017, Palo Alto has seen a 3.3% job market growth and over the next decade the future increase is predicted at 43.9%; this is higher than the 38.0% national average. The city is Silicon Valley's central economic focal point, with numerous talented professionals moving to the area. There are more than 7,000 businesses (Xerox, Houzz, Mashable, and Aricent are just a few examples) residing here that employ more than 98,000 people. Plus, there is a new council-approved scenario for the city which envisions adding up to 11,500 jobs until 2030. For real estate investors, this means ever-increasing numbers of employed homebuyers and tenants who are able to pay their rent on time, as well as high returns on investment properties.
  • Popularity as a living destination - Home of Stanford University, Palo Alto welcomes students, recent grads, and people working in the education sector every year. In addition, the city offers a vibrant dining scene, and great shopping ops such as the open-air, upscale Stanford Shopping Center. Families with young children are also drawn to this area, as it boasts highly appreciated schools like Walter Hays Elementary School, Living Wisdom School, and El Carmelo Elementary School. Being that popular as a living destination leads to a high housing demand, which translates into nice profits and a steady stream of year-round income for real estate investors.
  • Tech Hub - Palo Alto is the Silicon Valley haven where plenty of prominent technology companies reside in. Notable firms that have roots in Palo Alto include HP, Tesla, Cloudera, TIBCO Software, and VMware. Not to mention all the new startups that set their roots in the city. Thus, there's no secret that Palo Alto is a major tech hub that attracts thousands of professionals, including entrepreneurs. This is one of the main ingredients for profitable real estate investment, as investors in single-family houses can effortlessly choose from a bunch of renters.
  • Occupancy Rate- With only 5.2% of unoccupied houses and apartments, Palo Alto is experiencing low vacancy rates, a high rental demand, and rising rent prices. Moreover, renters make up 42.7% of the city's population; the cap rate & cash on cash return is 0.86%. In terms of appreciation, properties have appreciated by 141.4% over the past decade and 17.1% in 2017. This means that real estate investors who purchase properties can enjoy consistent returns on their investments both while renting and when selling. Additionally, Palo Alto council is planning on building up to 4,420 additional housing units within the city limits until 2030. It’s highly likely that this will lower the prices and give a boost to real estate investment.

What are the best neighborhoods to invest in Palo Alto

  • When it comes to desirability, areas like Old Palo Alto, Duveneck-St. Francis, Professorville, Crescent Park, and University South are all high ranking in Palo Alto, thus offer nice opportunities for real estate investing. However, there’s also Community Center, a neighborhood with a very low turnover, yet a great set of conditions for rental property investors.
  • While often regarded as a pricey real estate market, Palo Alto is packed with a multitude of options for investors in single-family homes. Its awesome infrastructure, a strong economy, and overall popularity are factors that ensure a high housing demand year-long.

 

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