Is Los Altos the New Palo Alto?

Recently the city of Los Altos, known for its quaint, small-town feel and surrounding groves of fruit trees, has undergone a transformation. The area, once rumored to be so quiet that one could literally lie in the middle of the street and sleep the whole night through, is now a blossoming hot spot for young families searching for a place to call home. Why is it that Los Altos, formerly known as a lazy refuge for retirees, suddenly has scores of young families scrambling to snap up real estate? The main reason may not be the one you would expect: the transformation is thanks in large part to Sergey Brin, the mastermind and co-founder of Google. Brin, who resides in the nearby Los Altos Hills, began investing in Los Altos in 2009 after starting a real estate venture group “Passerelle,” and since then the city has grown rapidly. The Silicon Valley real estate market has been hot for a while—and particularly so in Palo Alto. However, the rate at which Los Altos is growing has many people saying it may be the next Palo Alto.

“Passerelle” which means footbridge in French, states on its website that it “creates projects that positively impact the community and that enhance livability.” The company has bought up commercial real estate in the main arteries of downtown Los Altos, namely First and State streets, and is now renting out many of those prime locations at prices below market value to new businesses. Among the businesses that have popped up are Bumble, a kid-friendly café with a playroom, Linden Tree Books, a family bookstore that encourages children to read, and Area 151, an arcade that also hosts Birthday parties. In addition to fostering local businesses, Brin has been successful in making the city more appealing to families.

Long known for its sought-after schools, Los Altos is now an attractive destination for parents who want the qualities of a quiet and safe place to raise and educate their children, but also crave the perks of a hip downtown. However, this family-friendly transformation hasn’t necessarily been welcomed by everyone. Los Altos mayor Val Carpenter was quoted in a Wall Street Journal article referring to Passerelle as the “500 pound gorilla downtown,”  and explained that certain inhabitants had “very mixed feelings” about the real estate venture. Aside from some inhabitants’ lack of enthusiasm about the changes underway, the economic growth brought on by Brin’s investments and the resulting growth in residential real estate is undeniable.

Prior to the recent attention that Los Altos has garnered, Palo Alto, known as the “birthplace of the Silicon Valley,” has been the premier destination for young techie families looking to purchase a home. As a result, the competition to find a home there has been fierce, and it’s getting fierce in Los Altos too. Both Los Altos and Palo Alto have had multiple offers on 100 percent of all the homes sold within the past year. This probably doesn’t come as any surprise to homebuyers in the market right now, as bidding wars are certainly the norm. From my experience, while homes in Palo Alto sometimes have upwards of ten to fifteen multiple offers, homes in Los Altos typically have had fewer buyers vying for the final bid. However, in the past three months, Redfin data has shown that Los Altos is actually becoming more competitive than Palo Alto. The average amount of offers on a home in Palo Alto has been right around eight, compared to an average of ten offers per home in Los Altos.

With competition heating up in Los Altos, home prices are also on the rise. Last May, Palo Alto had the highest median home price of any city in Santa Clara County, coming in at $1,796,000 meanwhile Los Altos’ median home price was approximately $46,000 less, at $1,750,000. However, in the past year, Los Altos’ median home price has exceeded Palo Alto’s by an additional 5 percent year over year.

This recent shifting increases in competition and home prices in Los Altos certainly does indicate that it has become a hot spot for young families in Silicon Valley, and while people are saying that it’s the new Palo Alto, I’d like to offer a different opinion. Even though Los Altos does now have the popularity and status that Palo Alto had been known for, it also still has the qualities of the sleepy town that its longtime inhabitants love. Brin was careful to not disrupt the historic parts of downtown, and while he has helped make the town more vibrant for young families, you might still be able to get a good night’s sleep on downtown’s main thoroughfare, though I don’t necessarily recommend trying.

 - Mia Simon