The San Carlos market is very much in transition. A historical perspective shows that while the majority of the last 60 years have been positive years for San Carlos real estate, for those periods of time when San Carlos had to work itself out of a recession, a transitional period takes place in the real estate market. These transitional periods have one dominating force: low inventory. However, what makes this transitional period extraordinarily unique is that the transitional period has never been accompanied by mortgage interest rates around 4%. Just how low is an interest rate of 4% historically? It has never existed unless you were to take into account some of the government incentivized mortgage solutions coming out of the Great Depression. I was recently talking with one longtime San Carlos realtor who told me that she remembered popping champagne when mortgage rates finally dropped below 15% in the early 1980s. The point is that we are in uncharted territory when it comes to the size of the recession that appears behind us, coupled with historically low interest rates.
Some Buyers May Have Missed the Bottom
I wrote in a post earlier this week that realtors should stay away from predicting the economy and I will stand by that statement. The only thing myself or any other realtor should be commenting on is past data points and what we are currently seeing in our market today.
I remember the exact day the San Carlos market suddenly stopped moving. It was October 10, 2008. The stock market had taken a tremendous hit and our market hit a wall almost instantly. An examination of all of the numbers over the last three and a half years reveals that the true bottom of the San Carlos market probably took place somewhere between eight to twelve months ago. There is no doubt that things have picked up over the last few months, which has led us into a market which will be very stingy with inventory.
Moving From a Buyer’s to a Seller’s Market
There is not a single San Carlos seller who is going to recapture their 2007 value on their home in 2012. However, most will realize a noticeable difference from the four previous years both in terms of interest and value. As mentioned above, the first sign of a transitioning market is low inventory. We are right in the middle of it right now and will likely be there for 2012. Given the number of people trying to get into San Carlos right now, I believe you are going to see a logjam of buyers with the inventory that we do have and that can only increase value.
Serious Buyers Will Land Their New Home
While the inventory will be tight, and frustrating at times, buyers who have done their research, are working aggressively with a San Carlos agent and have their financing secured…..will find their home in 2012. Those who are taking more of a casual approach and are not ingrained in the market on a daily basis will still be looking for a home in 2013.
What to Expect
Multiple offers will be back this spring. We saw them on occasion in 2011. They will be more prevalent in 2012. The best thing you can do for a multiple offer situation is be prepared for it. Recognize that for many price ranges and areas in San Carlos you will be a part of a multiple offer process. There are many things you can do ahead of time to give yourself a better chance in these types of situations. Have your agent give you some pointers on how to prepare for the process now. A big problem with multiple offer situations is that many of the offers that come in are from buyers who were unprepared for the situation…and the way the offers are written and presented highlight the unpreparedness. If you are a buyer looking for your next home in San Carlos in 2012, do your homework now. Get your financing in order. Work with a San Carlos agent and educate yourself on our market.