There are lies, d**** lies, and statistics.
I’m sure you’re familiar with this statement that was made famous by Mark Twain. It’s funny how this rings true in today’s technologically-driven society, where data of seemingly any kind is available right at your fingertips. No matter what you want to know, or how you want to see it, it’s probably only a couple of clicks away.
So why is this relevant to the real estate market in San Carlos? Let’s take a peek at the numbers for July 2008:
|San Carlos Sales Trends||July 2008||Previous Month||Year-over Year|
|Median Price||$1,060,000||$1,050,000 (+1.0%)||$1,255,000 (-15.5%)|
|Average Price||$1,078,460||$1,123,680 (-4.0%)||$1,335,370 (-19.2%)|
|No. of Sales||33||29 (+13.8%)||26 (+26.9%)|
|Active||53||61 (-13.1%)||60 (-11.7%)|
|Sale vs. List Price||99.5%||98.6% (+0.9%)||103.2% (-3.6%)|
|Days on Market||35||27 (+26.6%)||27 (+28.0%)|
At first glance, you can see that the number of units that sold increased significantly, but we’re finally experiencing some price erosion over past months. OK, considering the length and severity of the nationwide housing slump, those are still very respectable numbers. And even though the DOM average grew to 35 days, it’s sill much shorter than other cities in the bay area who would kill to have numbers like these.
So far, so good.
Now let’s now take a look at the 3-month rolling averages:
According to this graph, everything is trending “up and to the right,” to use an overworked cliche from my days in technology sales. If you look at the rolling average for median and average prices, and especially the number of units sold, you’d think the roof is ready to blow off the market. Recession over. Pop the champagne…
Not so fast.
This is exactly what Twain was referring to…statistics are wonderful at making you believe something is different than what it really is. And the San Carlos real estate market is missing one vital ingredient that may alter this encouraging growth in the next few months:
Inventory to the housing market is analogous to gasoline in a car. If you’re cruising down Highway 5 at 85 MPH and you’re “Low Fuel” light comes on, one of two things are going to happen; you’re either going to fill up, or you’re not going to be going 85 mph much longer. Same goes with the real estate market…you simply can’t grow without inventory. You can’t sell what’s not there.
Right now, the inventory for single-family residences in San Carlos stands at 42, and this number could easily drop more before it rises again. 7 homes have already closed escrow in August, and there are only 33 homes t0tal that are pending sale. Just to equal July’s number of 33 homes sold, 79% of the homes that are now sale pending would need to close in August — that’s a tall order to fill. But even if they did, if you consider that it takes a little more than a month on average for a new listing just to get into contract, and probably another 30 days to close escrow, and the harsh reality of the mathematics sinks in. Without a significant increase in inventory, the market’s growth will starve from lack of “fuel” in the upcoming months. There’s no other possibility.
Does this mean the market is bad in San Carlos right now? Not at all. Prices are still hanging in there, and homes are selling in about a month on average. If the underlying message still isn’t clear, here it is:
Right now is a PHENOMENAL time to sell a home in San Carlos.
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