A massive congressional bailout of the financial markets, 500+ points-a-day swings in the stock market, a recession, high gas prices…..is there any good news? And what does it all mean for our San Carlos real estate market? On its face, the aforementioned news would seem like daggers into what has been a very solid San Carlos real estate market for the past ten years. First, it would be completely naive to suggest that the financial woes of the country will not have some negative effects on our local market. However, I am going to suggest that the woes will not be as dire as some will have you believe. So, before you give up and move to Nevada, consider the following:
(1) Local Economy. While the majority of the United States is experiencing a very difficult economy, our local economy is steady. Granted it is not as robust as a few years ago. However, our larger private sector businesses such as technology, biotechs and e-commerce companies are still hiring. During, and just out of law school, I was fortunate enough to work for one of the largest corporate law firms in the United States. As a result, I developed many friendly contacts with venture firms. After speaking with a few of them over the past few days I started to get the same story. While venture firms are obviously very concerned about the national economy, it is not going to distract them from continuing to support their local companies, investments…i.e. start-ups. Additionally, while I would never want to make light of a situation where someone is unemployed, the fact is that unemployment is not an immediate concern for us. It is a major concern in other parts of the country.
(2) Foreclosures/Short Sales. As mentioned in prior blog posts, San Carlos is not a haven for foreclosures and short sales. We are not Stockton or the East Bay. The effects of the credit market implosion have created more of an indirect effect, rather than a direct effect. For the most part, sellers in San Carlos do not have to worry about their value being brought down by the sale of a local foreclosed property. San Carlos buyers and sellers are more concerned with the variety of and availability of loan programs provided by banks who have been hit hard by defaults of borrowers around the country.
(3) Current Buyers and Sellers. Current buyers and sellers in San Carlos seem to be taking the news in stride. Most of my buyers feel that it is a good time to buy. My sellers who will have their homes hit the market in the next two weeks are realistic about the market. They understand that it is not 2005. They understand that there may be some negotiating ahead of them. Additionally, and perhaps more important, potential buyers in San Carlos are not likely to be the ones suddenly locked out of the tightening mortgage market. More succinctly, buyers in San Carlos are not patching together 5-10% downpayments along with their $1,200,000 loan. Most buyers in San Carlos are putting at least 20-30% down. Loan programs are still readily available for those with 20-30% down and solid credit.
The one question that remains unanswered is whether the more heavily effected local markets will be at such a discount that potential buyers cannot help but forgo the opportunities in San Carlos for an outstanding buy in another town. Its been my experience that most people who buy in San Carlos are specifically looking in San Carlos. It would take a fantastic opportunity to lure them away. Whether this opportunity will exist, and whether the buyers will follow, is yet to be determined.