Over the three months ending May 2026, the Los Altos Hills median sale price ran near $5.3 million, roughly 9.5 percent below the same window a year earlier, and homes sat about 15 days on market against 9 days in 2025. Read quickly, that looks like softness. Read carefully, it looks like diligence.
Buyers in this Town price acreage against a ceiling most listing summaries never mention. Slope, the Lot Unit Factor, and the septic regime decide what a parcel can actually become. Two lots at the same price per acre can produce very different maximum houses, and the gap between them is where 2026 buyers are spending their extra six days.
The Formula That Sets Your Ceiling Before You Draw Plans
Los Altos Hills uses a Lot Unit Factor, or LUF, to translate raw acreage and average slope into a Maximum Development Area (MDA) and a Maximum Floor Area (MFA). The formulas live in Municipal Code Sections 10-1.502 and 10-1.503. For a flat lot at 10 percent slope or less, MDA equals LUF multiplied by 15,000 square feet. Between 10 and 30 percent, the multiplier drops on a sliding scale of 375 square feet per additional percent of slope. Above 30 percent, MDA is LUF times 7,500 square feet, half of what a flat parcel of the same size gets.
Development area is not floor area. MDA counts the house footprint plus driveway, turnaround, patios, pool decking, tennis or sport courts, and ground-mounted solar. Every hardscape element you want on the parcel competes for the same budget. MFA governs the house itself, and it interacts with LUF on a second curve.
What Slope Does to the Envelope
A one-acre parcel gives you very different building rights depending on how the land sits:
| Average slope | LUF (approx.) | MDA ceiling | Notes |
|---|---|---|---|
| 8% | ~1.00 | ~15,000 sf | House, drive, pool, courts all fit comfortably |
| 18% | ~0.80 | ~9,000 sf | Every hardscape choice starts trading against the house |
| 32% | ~0.55 | ~4,125 sf | Below the 5,000 sf MFA floor without a permit path |
| 40% | ~0.40 | Conditional Development Permit required | See §10-1.503(c) |
The Town's own worksheet uses a reference parcel of a one-acre lot at 14 percent slope with 12,339 square feet of MDA and no special landscape area. That is the calibration point. Anything steeper falls off it quickly.
The MFA has its own floor. On any parcel with an LUF above 0.50, MFA is not reduced below 5,000 square feet. Drop below LUF 0.50 and that floor disappears; a Conditional Development Permit is required, and the Site Development Authority may approve up to 2,500 square feet without a variance. Substandard lots, those with net area under one acre, are additionally capped by a floor area ratio of 0.18 under the amended §10-1.503.
The 30-Percent Escape Hatch
There is a legitimate way out of the steep-slope penalty, and it changes negotiations on view lots. Under §10-1.502(d), a lot with substantial areas above 30 percent slope may calculate LUF and MDA on only the flatter portion of the property, provided three conditions hold together:
The flatter area used in the calculation must yield an LUF greater than 1.0 and contain a 160-foot diameter building circle, the excluded steep slopes must be contiguous and placed in a perpetual conservation easement prohibiting any construction or grading, and driveway access must sit outside the easement area.
Buyers evaluating a Hills parcel with a dramatic ridge should have a civil engineer test whether the 160-foot circle fits and whether the access driveway can be routed clear of the easement footprint before removing a due-diligence contingency. If the answer is no, the buildable envelope collapses to whatever the raw-slope formula produces.
Septic Is a Second Ceiling
The other ceiling most out-of-area buyers underestimate is sewage. Under Municipal Code Title 6, Chapter 4, Article 1, an existing residence must connect to public sewer if a main sits within 200 feet of the property line. New residences and major additions face the same trigger. Where no sewer exists, the parcel operates on an on-site system regulated by the Santa Clara County Department of Environmental Health.
Bulletin A, the Town's septic bulletin, sets the constraints that determine whether a lot can even carry a house at the size the LUF math allows:
- Drainfields are not approved on slopes exceeding 50 percent.
- Drainfields on slopes over 20 percent require additional investigation.
- Soil percolation rates must fall between 1 and 120 minutes per inch.
- Site evaluation includes a backhoe soil profile trench dug to at least 11 feet.
- Every sewage system component within 100 feet of an existing or proposed well must be shown on the site plan.
For an ADU on a septic lot, DEH must confirm the existing system can serve the new load before the Town issues a permit. Two identically sized parcels can support very different projects if one has thin soil over rock and the other has 11 feet of loam that percs at 30 minutes per inch. Buyers should request the parcel's DEH file during diligence, not after.
Where the Square Footage Actually Comes From
Once you know MFA is capped, the question becomes how estate homes in Los Altos Hills reach 8,000 or 10,000 square feet of finished space. Two exemptions do most of the work.
The first is the basement. Under §10-1.202, a basement is excluded from floor area if the finished floor of the level above sits no higher than 28 inches over the adjoining grade and at least 75 percent of the basement's perimeter is wholly underground. On a lot where MFA is 6,500 square feet, a code-compliant basement can add several thousand more without spending a square foot of the LUF budget. The construction cost per square foot is high, and the Parcel Water Budget worksheet must still balance, but the entitlement math works.
The second is the ADU. State law and Ordinance 612, effective July 20, 2024, allow one detached ADU of up to 800 square feet on any R-A lot with an existing or proposed single-family dwelling, and that 800 square feet is exempt from both MDA and MFA. Any additional ADU floor area counts against the caps. Setbacks are 40 feet at the front and 4 feet on the sides and rear, with a 16-foot height limit that rises to 19 feet if the ADU is set 30 feet from the side and rear property lines and provides its own parking space.
The Rules Are Still Moving
Buyers signing in the second half of 2026 should confirm which version of the code applies to their parcel. On January 26, 2026, the California Department of Housing and Community Development issued findings that Los Altos Hills' ADU and SB 9 ordinances are out of compliance with state law on several points, including a deed restriction requirement on SB 9 splits and a prohibition on ADUs on SB 9 lots. The Town had until February 25, 2026 to respond. Amendments are the likely outcome, and a parcel's build rights may shift with them.
Two adjacent parcels, one created before October 28, 2023 and one after, already sit under different rules. Substandard lots created after that date lose the 5,000 square foot MFA floor entirely. The recording date on the parcel map matters as much as the acreage.
Reading a Softer Median Through This Lens
Return to the numbers. A 9.5 percent year-over-year decline in the three-month median, with days on market roughly 60 percent longer than a year earlier, is consistent with a market where buyers are pricing the buildable envelope rather than the raw acre. When two comparable-looking lots sell for materially different prices, the delta usually lives in slope, soil, sewer distance, and the parcel's LUF worksheet. A composition shift toward more constrained parcels closing, or toward buyers taking their time to verify the ceiling, will pull the median down even when unconstrained estate lots trade at strong prices.
Questions to Answer Before You Waive Contingencies
- Has an MFA and MDA worksheet been completed for the parcel, and is it on file at Town Hall?
- What is the parcel's average slope calculation, and does any portion exceed 30 percent?
- If the parcel relies on the 30 percent carve-out, does a 160-foot building circle fit within the flatter area, and can the driveway be routed outside a conservation easement?
- What is the distance from the property line to the nearest public sewer main?
- Is there an existing DEH septic file, and when was the last site evaluation?
- Was the parcel created after October 28, 2023, and if so, is it substandard?
- Is any portion of the site within a geotechnical or seismic hazard zone that would trigger additional site development review?
FAQ
Does an ADU always help resale value in Los Altos Hills? The 800 square foot MDA and MFA exemption is a real gift on constrained lots. On a lot where the primary residence is already near the MFA ceiling, an ADU is often the only way to add livable square footage without a variance. On an unconstrained estate lot with room to grow the main house, the calculus depends on buyer preference.
How long does a Site Development Permit take? Projects under 3,000 square feet of development area typically move through administrative review by the Planning Director. Above that threshold, the Planning Commission process applies. All submittals now go through the Town's eTrakit portal, in place since July 1, 2024.
Can a basement really solve the MFA problem? It can add space that does not count against MFA, provided the 28-inch grade rule and 75 percent underground perimeter rule are both met. It does not add MDA relief for hardscape, and it does not exempt the project from the Parcel Water Budget.
What if the parcel has a well? Wells introduce a second layer of DEH review, and any sewage system component within 100 feet must be mapped and approved. Wells and septic on the same parcel constrain each other's placement.
If you are evaluating a Los Altos Hills parcel this summer and want to understand what it can actually become before you write an offer, Hummingbird Homes can walk the LUF and DEH questions with you and coordinate the civil, geotechnical, and design review before the contingency clock runs. Contact us to start.
