In Palo Alto from Jan 1, 2012 until June 30, 2012 there were:
1 closed short sales
3 closed bank owned homes
Total sales during this time period were 284
Total % Short Sales: .3%
Total % REO Sales: .9%
Total Percentage Palo Alto Distressed Properties: 1.2%
1.2% of all Palo Alto sales being distressed properties is not enough to even comment on. The price of homes have in Palo Alto is now up to pre 2008 prices in the $2,500,000 price range and the homes over $2,500,000 usually do not have loans that are a very high percentage of their value so anyone who is having financial problems can generally sell and be made whole. So if you are looking for a bargain, look outside of Palo Alto.
If you have any questions about short sales or foreclosures in Santa Clara County please feel free to contact me.