The real estate market in San Carlos is a bit of a moving target right now. One day it is ripe for a “meeting of the minds” between buyers and sellers and the next day the two could not be further apart. “Volatile” might be a bit of a strong word because we do not have a ton of price fluctuation. However, there seems to be a great deal of confusion and uncertainty on behalf of both buyers and sellers. Listed below are 4 key questions for our upcoming 2009 Spring Market:
(1) Who does this market benefit the most?
The first answer is easy, buyers. Buyers who have been on the sidelines over the past year may be able to find a deal they did not think possible. Sellers are clearly ready to make concessions on a number of items to get their property sold. You would probably have to go back to pre-1996 to find similar favorable conditions for buyers.
The second answer is a little more specific. I believe this market benefits sellers who are looking to sell their starter home and move up within the San Carlos market. For example, lets suppose a seller decides to sell their 1,500 square foot home for $900,000. During the height of the market they may have been able to get $1,000,000 for the same property. This can be a tough pill to swallow because the seller focuses on a loss of $100,000. However, if the goal is to move up in the San Carlos market that same seller may find solace in his purchase. Suppose that seller does sell his home for $900,000. He then looks to buy a home that he can now get at $1,500,000 which at the height of the market he may have had to pay $1,700,000 for that same house. His $200,000 discount from the height of the market will entirely offset his $100,000 decrease in value of his former property.
(2) What’s going on with interest rates?
Interest rates will play a key role in how our market shakes out. Everyone knows that interest rates are at historic lows, which should benefit our market as a whole. If you were to interview enough well respected mortgage brokers you would probably get a consensus opinion that interest rates will remain low through spring, but beyond that is really anyone’s guess. While qualifying for loans is more difficult these days, the average San Carlos buyer does have their 20% down and outstanding credit and income. Additionally, many brokers believe that the restrictions and rates that are attached to jumbo loans (loan amounts above 625K) should be relaxed within in the next three to four months.
I am of the opinion that our slightly lower than normal volume of transactions over the past few months has nothing to do with the ability of San Carlos buyers being qualified, but it has everything to do with buyers waiting to see how much lower some sellers may go on their prices. Further, I think you are going to see an “all-in” mentality on behalf of many buyers by late spring. The realization will set in for most buyers that they are facing what is truly one of the most unique opportunities in the history of San Carlos real estate. The combination of historically low interest rates (which may not last much longer) and the willingness of sellers to negotiate most aspects of the transaction should be enough to move our inventory for the most of 2009.
(3) Will we feel the effects of the Stimulus Plan?
I have had a few buyers and sellers ask my for my opinion on the effects of the Stimulus Plan on San Carlos real estate. It would be a stretch to say that we are going to feel an immediate, direct impact once it is signed…however, there is a smaller contingency that believe our real estate market will receive a small upward push. I tend to believe the effects will be negligible for us and I would encourage buyers and sellers not to allow the Plan to alter their plans one way or the other.
(4) Will White Oaks and Howard Park continue to demand the highest prices?
Yes. There is absolutely nothing to suggest otherwise. It’s the same story as last year. The ability to walk to downtown and Burton Park are very high on most buyers’ lists.