With all of the volatility that we’re suffering through right now with the state of our current economy, it’s no wonder that everyone has such a pessimistic view of the real estate market. And why shouldn’t they? It seems as if there’s an endless stream of bad news coming at us from every media source about real estate. But if you have been trying to buy a home in San Carlos, isn’t this the perfect storm that you’ve been waiting for? After all, home prices been dropping steadily — the average price of a home is 14% lower this year than the same time last year. And homes are staying on the market longer. It’s finally a buyer’s market in San Carlos…
So why aren’t more buyers actually buying? What’s holding them back? I believe there are three myths in today’s market that are keeping many qualified buyers on the fence:
Myth #1: Banks aren’t lending money to buy homes.
If you believe what you read in the papers, you’d think it’s impossible to get a home loan today. But while lenders have more stringent qualification guidelines in place, they are ready and willing to loan money. In fact, the requirements that are in place now are virtually identical to what was in place back in 1999-2000. You’ll need to provide documented income, have a good credit score, and probably be able to put some money down. But rates are pretty good right now, and when the risk is reduced in mortgage-backed securities, they’ll probably drop again. But they won’t stay down forever, as many are predicting an inflation cycle in the next couple of years.
The fact: Money is available, and banks are ready to lend.
Myth #2: We haven’t hit the bottom of the market yet.
Here’s a little secret: There is no “bottom” of the market. There is no magical moment when the price of a home in San Carlos will bottom out and suddenly start to increase — it won’t be on February 12th at 10:31 in the morning. In fact, we won’t know we’ve hit an inflection point until we’re well past it. Unlike stock prices which can be tracked to the microsecond and and all sorts of declarations can be made about tops and bottoms of a market, homes are NOT commodities like stocks. Every home and selling situation is unique. But it’s critical to remember that the value of a home is determined by the group who has the power in a given market — and right now, that group is the buyers. The sellers own the power in a hot market.
Here’s a good example of what I’m referring to: Just this past week, the home at 1381 Chestnut St sold for $800,000. If you follow White Oaks real estate, you’d probably guess just by the price that it’s one the many 2BR/1BA 1,000 square foot ranchers that dot the neighborhood, because that’s about what they normally sell for. But 1381 Chestnut is a nice 3BR/2BA at 1,800 square feet in a great part of White Oaks. Kudos to the buyer – they read the market correctly and consequently got a screaming deal. They identified the “bottom” of this particular transaction.
The Fact: There is no “bottom” to a real estate market. Every transaction is unique.
Myth #3: The quality of the inventory is poor in a down market.
Right now, there are 64 single family homes for sale in San Carlos, which is near the highest level of the entire year, and they range from a 1BR/1BA at $486k to a 4BR/4BA at $3.8M… And more are on the way — there are two nice homes with “Coming Soon” signs in White Oaks right now. For a whole variety of reasons, people sell real estate in good markets and bad markets.
The Fact: Inventory is no different than it is in a healthy market. There is something for everyone right now in San Carlos.
Let’s look at this from another perspective — would you rather buy a home in a soft market where you don’t have much competition from other buyers, and you have much more influence on the selling price…OR, would you rather be buying while prices are rising and you’re competing with many other buyers, thus giving you far less influence on the price?
Simply put, now is an incredible time to buy real estate in San Carlos.
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