The State of the San Carlos Housing Market
It’s been a roller coaster over the last two years, but the San Carlos housing market is currently a well-oiled machine. I say this because there is not just one price range that is doing well, it’s all of them. The lower market: 750K and under, the mid-market: 850K – 1.250M, and the high-end market 1.4M and up….are all currently moving, and moving quickly.
How did we get here?
October 2008. The first two weeks of October of 2008 were as crazy as ever in San Carlos. Multiple offers were plentiful, and the market continued to hum along. During the second week in October of 2008, the stock market faced one of its worse drops in value. Almost simultaneously, the San Carlos housing market came to a grinding halt.
January-May 2009. San Carlos property values were in a historic freefall. Next to nothing moved in San Carlos. The only properties that sold were those that got in front of the market. With values falling by as much as 20% (above a million dollars) and 12% (below a million dollars), it took motivated sellers in order to establish any type of inventory movement.
Summer of 2009. Signs the the economy may be improving along with historically low interest rates helped fuel some optimism into the San Carlos market, but it was not enough to stop the freefall – only slow it down.
October/November 2009. The prevailing belief in San Carlos is that home prices have bottomed. This is supported by the fact that much of the lower market homes started to move again, many with multiple offers. Sales of homes over a million dollars are still down considerably.
January-March 2010. Multiple offers continue in the low-range homes, but the shortage of inventory in the mid-range starts to fuel multiple offers in that sector as well. The market clearly picks up steam. Factors for the movement include tax incentives, historically low interest rates, and a firm belief that the market has bottomed. Also helping sellers is competition. Many San Carlos buyers were on the sidelines for 2008 and 2009. Many start to feel that they have waited long enough and do not want to miss the nexus of lower prices and low interest rates.
April/May 2010. The run on San Carlos homes spills over to the high-end price zones. Several homes approaching $2,000,000 receive multiple offers. Multiple offers are present in all three levels of San Carlos homes.
Currently for San Carlos:
* 52 active homes, 42 pending homes
* 22 of the 42 pending homes are in the mid-range or higher
* 6 of the 42 pending homes are in the high-end price range
* 5 of the 6 of those high-end homes sold in under 21 days on the market
* Average Days on Market for all pending homes: 32….down considerably from six months ago
* Projected price per square foot for pending homes $540….up considerably from six months ago
* Multiple offers are back, at all levels including the top of the high-end market. While not as powerful as in years past, they are still contentious and filled with anxiety for buyers.
Whether this trend continues or not is speculation. Some feel the market has bottomed, and others are expecting a double-dip in pricing. The one item that is not up for speculation is that San Carlos is currently hitting on all cylinders.
3 Comments
Bob
You are so right.
70% of all San Carlos homes that closed in April 2010 sold at or above list price.
In Palo Alto, the number was like 52%.
In Menlo Park, the number was like 37%.
San Carlos market hotter right now than even Palo Alto and Menlo Park.
Hi Arn, can you explain how homes closing at or above list price means the market is hot or cold. I thought it meant that the San Carlos sellers are being more accurate/realistic in pricing their properties versus our neighbors to the South. Are there buyers in PA or MP now looking in San Carlos for houses or vice versa?
Ken
Good point!
Yes, San Carlos home owners might be more “aggressive” in their pricing than our neighbors to the south. That is one possibility.
Sales above list price indicate a competitive market with more buyers than homes – this type of market could be described as hot rather than cold. If there weren’t 5 buyers for every house but rather only ! – no matter how aggressive a San Carlos house is priced, it is unlikely to sell for more than list unless there are other competing offers.
So while the number of sales above list does reflect pricing decisions of the sellers, it also reflects the desires of the buyers. It is NOT either or. It is BOTH AND.
Another factor could be price range. While the upper price ranges of the market are showing signs of improvement, I believe it is generally true that the lower price ranges are still stronger at the present time.
San Carlos prices are lower than Palo Alto and Menlo Park.
So perhaps San Carlos’ higher percentage of sales above list are a reflection of this fact, also.
Generally property values on the Peninsula move fairly in unison. That being said over a period of several months, certain areas may become hotter than others.
The current market offers great opportunity for the first-time buyer. The current market also offers good opportunity for the move-up buyer. But right now, maybe a lack of inventory, maybe fears about taking on more debt, maybe lack of equity in one’s existing house prevents many move up buyers from taking the jump.
At the current time, entry level homes in San Carlos are more affordable than those in PA and MP. “Normal” – ie. middle income? – people can still buy in San Carlos – this is less true in MP or PA.
I would say buyers looking for homes on the Peninsula will consider San Carlos, Menlo Park and Palo Alto among other cities, no doubt.
The type, size, quality, and price of a home a buyer will also effect where a buyer looks.
If one can afford say $800,000; San Carlos will offer much better opportunities than Palo Alto or Menlo Park. At $800,000 most homes in Palo Alto and Menlo Park will generally be in mediocre condition and probably located by HWY 101 or Cal Train. One can buy a much nicer house in a nicer neighborhood in San Carlos for the same money. That is the choice I made when I moved when I moved to San Carlos in 1986. I just felt I got more for my money and I liked White Oaks much better than the MP and PA neighborhoods I could afford.
If one is looking for a new house under $2M, again Palo Alto and Menlo Park offer fewer options than San Carlos.
There are some buyers that only want PA or MP schools.
Every buyer is different.
The main point of my comment is that 70% sales over list does indicate a strong market in San Carlos. I included the PA and MP figures from comparision. Certainly having 40% to 50% of sales above list indicates a strong market too.
The bottom line is that all those buyers who waited for the bottom of the market have missed the boat. Looking back it appears the bottom was late 2009.
Multiple offers are almost the norm right now rather than the exception they were 12 months ago.
Hope this makes at least some sense to all.
Arn