In the last four weeks we have seen a sudden influx of buyers back into the market. San Carlos has managed to keep a very healthy market during our current credit-crunch era, but recently buyers have become increasingly frustrated when trying to buy in San Carlos.
Before we examine the causes of the buyer frustration in San Carlos, it would be a good idea to examine the reasons behind a sudden increase in the number of buyers. When the mortgage news first started to hit the street in early August, some buyers suddenly pulled in the reigns and were waiting to see how the San Carlos market adapted to the bleak mortgage news. Four months have passed and buyers have started to realize that, not only did San Carlos prices not drop as was anticipated by some, but the market was still very favorable toward sellers. Those sellers that chose to price their property at a reasonable number usually sold it immediately, and sometimes with multiple offers. Those buyers that have been on the sidelines for the past four months have suddenly realized that now may be their best opportunity to get in. With interest rates still at historical lows and the local economy still holding strong, San Carlos real estate is poised for another strong Spring. Not wanting to go up against additional competition in the Spring, these “sideline” buyers jumped back into the market about a week before Thanksgiving.
The largest source of buyer frustration in San Carlos is “inventory”. Currently, San Carlos has only 35 homes on the market. 25 of those 35 homes have been on the market for at least 7 weeks. The remaining ten homes are all over the map in terms of their price. The majority of people looking to move into San Carlos are in the $900,000-$1,250,000 price range. Only three, of the previously mentioned ten homes, are in this price range…..and one of those three has just been re-listed (so it has actually been on the market for much longer). The result is a stale inventory.
The stale inventory has benefited sellers who priced their property appropriately from the first day on the market. Buyers have flocked to these types of properties and often the sellers have received multiple bids and bids at or over their asking price.
The other source of frustration for buyers is a purely mental byproduct of being blitzed with national news regarding a hopeless real estate market. The number one mistake buyers make in San Carlos is not understanding that our market plays by its own rules. After hearing the doom and gloom of the national market, and even the East Bay and South Bay markets, buyers cannot comprehend paying at asking or slightly above asking for a property in San Carlos. For them, paying at or slightly above asking to get a property is counterintuitive given all of the news articles and reports on the real estate market.
Finally, offers that are being made on San Carlos properties which have been sitting for over 3 months are not being accepted by sellers. Even though the buyer’s offer may have been completely reasonable, some sellers are still mentally stuck in April of 2004, and believe their home is worth every penny of the list price.
(1) Lack of inventory, (2) a mental block with regard to the national news, and (3) unrealistic sellers, have all led to a tremendous amount of frustration for San Carlos buyers. The inventory will loosen up a bit in the Spring, but I do not see any relief for numbers 2 & 3.