Missed Opportunity For Some
If you are lucky enough to own property in San Carlos over the last eighteen months, your current property value has probably helped to put a smile on your face. When you go through the type of market that we have experienced over the last eighteen months, the majority of the attention is focused on increasing property values and buyers frantically trying to land a house in multiple offer situations. However, there is another group that has gotten passed over in these conversations. From 2010-2011, there was a large pool of buyers who were obsessed with perfectly timing the bottom of the San Carlos market. The majority of these buyers were in the $850,000-$1,000,000 price range. Unfortunately, many of these buyers are not only kicking themselves for not investing earlier in San Carlos real estate, but many now realize their goal of living in San Carlos may well have passed them by.
What makes buyers in this group so frustrated, is that they had what would have been a great investment, but they tried to get too tricky with the system and the market, and they lost. Big time. Not only did they lose on the investment perspective, but they lost their ability to live in the house they wanted in San Carlos. 2010 followed an absolutely horrendous year in the San Carlos real estate market. Everyone had an opinion on just how long the recession would last and whether housing would collapse even further in San Carlos. It’s tough to blame this set of buyers as many were first time home buyers and scared out of their minds with what was going on with the national economy.
Digging a Deeper Hole
I met with many buyers in 2010 who were intent on moving to San Carlos. At that time, you could purchase a 3/2 in White Oaks for 950K without so much as another buyer competing with you. That same house today is 1.25M. So why didn’t many of these buyers pull the trigger in 2010? Many were scared given the broader economic conditions. Some, frankly, thought they could outsmart the market and believed that housing would continue to drop. In early 2011, we turned a corner in the San Carlos real estate market and you could feel it start to heat back up. We were up, off our lows of 2010 and the buyer pool was starting to swell. It was clear that we were finally ready to start our recovery. It is at this point where many in the above mentioned buyer pool made their fatal mistake. Many refused to believe that the sudden increase in the market was nothing more than temporary. Additionally, for many to buy in 2011 would be admitting that they missed the true bottom in 2010. By the end of 2012, many looking in this particular price range were priced out. Subsequently, the 20% appreciation we have seen in the last twelve months is like rubbing salt in an open wound for many of these buyers.
A Perfect Example
I recently spoke with a past client of mine who encouraged me to write this post as she believes there are many buyers who fell into the same trap as she and her husband. First, let me say that this particular client and her husband are two highly educated people who are very likeable with excellent jobs. One graduated from a top five business school, the other works at a prominent software company. In 2010, they were after a three bedroom house in the flats of San Carlos with a budget up to $1,050,000. Everything about their search and their price/space requirements was completely reasonable. However, they believed the market would fall even further. They bid on a house toward the end of 2010 that was priced at 975K. They and the sellers could not bridge a 15K gap in their negotiations. My clients decided to wait and see with the market and took a one year lease on a home in 2011. By the time they returned to the market in 2012, the upper end of their budget at $1,050,000 was not good enough to get them the house they had wanted just one year ago at $960K. By the summer of 2013, they came to the realization that if they wanted to stay in San Carlos at $1,050,000 in the flats, their 3/2 of just two years ago would now need to be a 2/1, and they missed out on two years of tremendous equity growth.
There are lessons in every type of housing market. I certainly have learned many myself. Real estate is not like day trading, especially in San Carlos. Perfectly timed peaks and valleys are almost impossible to predict. Long term investing in San Carlos real estate under sensible conditions is always the best approach as it has always been a town with a proven track record of incredible results over extended periods of time.