Two headlines from the last few weeks tell most of the story. The week of June 26, 2026, the median list price in Los Altos Hills sat near $11.8 million with a Market Action Index around 48, while the trailing three-month median sale price through May 2026 came in at $5.3M, down 9.46% compared to the same period last year. That is not a market in disagreement with itself. It is a market where two parcels down the street from each other can carry very different permitted square footage, and the price they eventually clear reflects that difference rather than their acreage.
Buyers who compare Hills estates by lot size alone are pricing the wrong asset. What you are actually buying is a buildable envelope defined by the Town, and the friction that surrounds it: easements, septic windows, oak protections, and a sewer-connection trigger most out-of-town buyers never see coming.
What the Town lets you build is a formula, not a lot line
The Town of Los Altos Hills converts every parcel into a single number called the Lot Unit Factor, then runs that number through two formulas to produce a Maximum Floor Area (MFA) and a Maximum Development Area (MDA). MDA covers hardscape and structures on the ground; MFA covers enclosed square footage above it. On the flattest lots, MDA equals LUF multiplied by 15,000 square feet, stepping down through a slope-graded middle band until, on the steepest sites, MDA equals LUF multiplied by 7,500 square feet. MFA follows a parallel curve, bottoming at LUF × 5,000 square feet on slopes at or above 30 percent.
Two consequences follow. First, slope is not a cosmetic issue. A one-acre parcel at 8 percent slope and a one-acre parcel at 32 percent slope can produce building envelopes that differ by thousands of square feet. Second, the Town holds a discretionary lever above the formula. The published numbers are ceilings, and the City Council and Planning Commission have discretion to apply stricter standards to reduce development area where site specific constraints dictate further limitations.
There is one path back from a punishing slope calculation. On constrained sites the LUF and MFA may be recalculated using only the flatter portion, provided the area used results in an LUF above 1.0 with a minimum 160-foot-diameter building circle, the excluded steep slopes are contiguous and placed in a conservation easement prohibiting any construction, grading or development in perpetuity, and driveway access sits outside the conservation easement. That is a valuable tool. It is also a permanent decision recorded against title.
A worked comparison
Consider two adjacent one-acre parcels, each priced at $5.3 million. Slope changes everything the money buys.
| Parcel | Average slope | Approx. LUF | Approx. MFA ceiling | Price per permitted sf |
|---|---|---|---|---|
| A (flat pad) | 8% | ~1.0 | ~6,300 sf | ~$841 |
| B (hillside) | 32% | ~0.55 | ~2,750 sf, floored to 5,000 sf* | ~$1,060 |
*The allowable floor area on any parcel shall not be reduced to less than 5,000 square feet by application of the provisions of this section, subject to Section 10-1.502(e) exceptions and to LUF thresholds. The floor matters. Without it, the hillside parcel above would price at closer to $1,900 per permitted square foot at the same asking price.
Price per Permitted Square Foot is not a Campi invention. It is a discipline that acts like a common yardstick across very different parcels — a practical way to compare lots is to estimate Price per Permitted Square Foot, sale price divided by allowed MFA. Once you start reading Hills comps this way, the flat, volatile price-per-square-foot behavior of the neighborhood starts to make sense: the mix of what trades in any given quarter varies wildly in envelope, not just in address.
The easements that ride along
Every buildable envelope in Los Altos Hills is qualified by what the Town can require in exchange for approval. At the site development stage, the Town may condition a project on an Open Space Easement over portions of the property with oak tree coverage, 30%-plus slope and/or over creek areas; payment of pathways fee, dedication of a pathway easement and/or construction of a pathway consistent with the Pathway Master Plan; and fire sprinklers and/or a fire hydrant. Any of those can shrink the usable portion of a lot without changing its recorded acreage.
The pathway system in particular has moved recently. Ordinance 381 established the Pathway Fund with easement, construction, and fee requirements, and on September 18, 2025 the City Council passed a Town resolution for updated Pathway Development Impact Fee and pathway construction requirements, with the ordinance amendments adopted on October 16, 2025. If you are underwriting a remodel or a scrape-and-rebuild on an older estate today, the pathway math is not the pathway math the last owner remembers.
There is also a quiet lever most buyers miss: sewer. Much of Los Altos Hills runs on septic, but the moment a project trips a threshold, the calculus changes. Per the Town's site development conditions, if within 200 feet of a sewer line, the property will be required to connect to the Town's sewer system. That is a real cost line, and it changes which estates are practical candidates for a large addition.
Heritage oaks add one more constraint that behaves like an easement. Structures proposed within the critical root zone of a heritage oak require review and approval of an arborist report prepared by a licensed or consulting arborist. On a hillside lot with mature valley or coast live oaks near the buildable circle, the arborist's opinion can move the pad by ten or fifteen feet, which in turn can move the MDA.
Septic, wells, and a calendar most buyers do not read
Older Hills estates almost always come with a septic system, sometimes a private well, and a Santa Clara County Department of Environmental Health (DEH) file behind both. The rules there are specific and seasonal. Septic installation or repair work is prohibited between November 1 and April 1, with emergency repairs allowed only with an approved erosion control plan. A failed leach field discovered during a fall inspection cannot simply be replaced in December. Closings get restructured around that calendar every year.
The system's design tolerances also constrain what a future buyer can add. Drainfields will not be approved on slopes that exceed 50 percent and are only approved on slopes over 20 percent with additional investigation, and the Town's residential guide notes that homes may be subject to Health Department review and approval if connection to a private sewage disposal system is to be made or if an on-site water well must be capped or relocated. Guest houses, ADUs, and pool expansions on septic lots run through this filter before they ever reach the Building Department.
Two practical takeaways for buyers under contract. First, request the septic as-built and the last two pump records from DEH before releasing the physical contingency. County guidance recommends pumping every 3–5 years to prevent solids from entering and clogging the drainfield. Second, verify the reserve area on the site plan. The county requires two drainfields, each 50% of the total size required, interconnected with an approved diversion valve, plus an additional reserve area providing at least 100% future expansion of the disposal field. That reserve area is buildable-envelope-eligible on paper and unbuildable in practice.
Wildfire readiness is now condition, not commentary
Buyers arriving from lower-elevation cities sometimes read defensible space as landscape advice. In Los Altos Hills it is closer to a specification. The Town's guidance describes zones with no flammable material within 0 to 5 feet of the house, wider spacing and no ladder fuels from 5 to 30 feet, and continued spacing and ladder-fuel reduction from 30 to 100 feet. Sellers who invest in that work before listing tend to see it reflected in inspection reports and insurance conversations, both of which now shape offer prices at the top of the market.
Reading a Hills comp
Put it all together and the median headlines start to behave. A recent private tracker recorded a June 26, 2026 inventory of 15 active listings, and Redfin's May 2026 snapshot showed homes selling after 15 days on the market compared to 9 days last year, with 28 homes sold in May this year, up from 22 last year. The Zillow Home Value Index for the town sits near $5,257,351, down 4.4% over the past year. Read those three numbers side by side and the story is not a market in decline. It is a market where the mix of envelopes trading in any given month drives the median more than any change in per-envelope value.
The right question when a Hills estate comes up is not "how much per square foot?" It is: what does the LUF worksheet say, what easements have already been recorded, is the property inside the 200-foot sewer trigger, and is the septic reserve area still intact.
A few questions worth asking early
Can we see the parcel's LUF, MFA, and MDA worksheet before writing an offer?
Yes. Previously completed MFA MDA Worksheets can be reviewed at Town Hall through the Town's public records. Not every parcel has one on file, and where none exists, the Town's fillable worksheet produces the same numbers with a slope survey.
Does an ADU count against the envelope?
Generally, yes, with defined caps. The Town allows one ADU and one JADU on a lot with a single-family dwelling, and the maximum size of a detached ADU that is a studio or one bedroom is 850 square feet, and up to 1,000 square feet with more than one bedroom. Design constraints on setbacks and height are specific and worth reviewing before assuming an ADU will fit.
What changed with the pathway fee in 2025?
The Council adopted an updated Pathway Development Impact Fee resolution on September 18, 2025 and the corresponding ordinance amendments on October 16, 2025. Underwriting a project from an older pro forma will understate this line.
Work with us
The Hills reward patience and preparation. If you are considering a purchase, a sale, or a pre-market renovation on a Los Altos Hills estate and want the envelope, the easements, and the calendar read alongside the comps, The Campi Group is here to walk the parcel with you.
