Statistics provided to the Almanac by the online real estate database company Zillow show that in May, Atherton had the priciest real estate in the country, with Portola Valley at No. 5 and Menlo Park at number 40. In the Zillow analysis, Woodside is lumped in with the part of Redwood City with which it shares a ZIP code, but still comes in at 43.
Zillow also showed that in May, property values in Atherton, Menlo Park, Woodside and Portola Valley were all at the highest level they had ever reached in its database.
Other cities in Zillow's top 10 in May include Beverly Hills, No. 2; Fisher Island, Florida, No. 3; Santa Monica, No. 4; Manhattan, New York (10013 ZIP), No. 6; Los Altos, No. 7; Palo Alto, No. 8; Manhattan, New York (10007 zip), No. 9; and Montecito, California, No. 10.
Zillow came up with the rankings, said Zillow public relations manager Cory Hopkins, by using its Home Value Index. The index is the median value, or the point at which half the prices are higher and half are lower, of Zillow's estimated current value for every home in an area, not just those that have recently sold.
It's not only Zillow that says Atherton is expensive. In October, Forbes magazine's website said Atherton is the most expensive ZIP code in the country. Forbes based its data on real estate listing prices over a three-month period. In the Forbes list, Portola Valley's ZIP code was ranked No. 9 and Woodside's, No. 22.
"Atherton is highly desirable as a residential community because you have large properties in a semi-rural environment" that are centrally located, said Atherton Councilman Rick DeGolia.
"It happens to be the hub of the Peninsula," said Alain Pinel, a senior vice president of Intero Real Estate Services, working out of their Woodside and Menlo Park offices. Atherton is an easy commute from San Francisco, Silicon Valley, San Jose, and even the East Bay, he said. "It's extremely convenient."
Ken DeLeon, founder of DeLeon Realty, said Atherton's ascent to the "most expensive real estate in the country is being driven by two types of clients: tech buyers from companies like Google and Facebook, and overseas buyers, particularly from China and India."
Many of these buyers, he said, "are technology executives who are using stock options to purchase these trade-up homes and are drawn to the privacy and generally excellent schools Atherton offers."
Mr. Pinel said Atherton is also attractive because the town is completely single-family residential, with no commercial or multi-family zoning, a fact that helps to keep prices stable. "Stability is the best basis for acquisition," he said.
Another characteristic Atherton shares with other Midpeninsula communities is the weather. "The micro-climate in Atherton is absolutely extraordinary," said Mr. Pinel.
Does the fact that Atherton has been in the news as the most expensive real estate market in the country also attract buyers? Mr. Pinel says yes.
"Whenever you have the reputation of being the most expensive, it does suggest subliminally to a lot of people that it is the best," he said. "And if it is the best, and you've got a lot of money, then you will be interested in going there and taking a look at it." "There is absolutely no question that the reputation of being the most expensive is going to attract a lot of people who are going to buy not so much to live on the property but to brag to their friends and associates," he added.
Mr. DeLeon said many Atherton buyers are "drawn to prestige and seek the most expensive communities and neighborhoods to live in."
All those factors make the area attractive for investors, and many of them, Mr. Pinel said, are from outside the United States. At least half the buyers of properties selling for more than $5 million today are foreign nationals, he said. Some of them do not even plan to live in the properties they buy, but just want a safe place to invest their money.
Mr. DeLeon agreed. "My recent trips to China and India showed me that these buyers prefer flat and central locations in China and India, which translates to these buyers preferring Atherton to the rural and distant feel of the other high-end cities such as Woodside and Portola Valley," he said.
Mr. Pinel predicted that the local market will continue to be strong. "More and more buyers are buying on the Peninsula, particularly in Atherton," he said. "What we have seen in Atherton is only the beginning."
He also predicted that the number of buyers from China will increase as the Chinese economy creates more very wealthy people looking for a place to put their money. "The Chinese appetite for very, very expensive luxury real estate — that's enough to justify that prices are not likely to go down much, if at all, and are very likely to keep going up," Mr. Pinel said."