During the boom cycle of 2005 (remember way back then?) the price of the basic starter home in the White Oaks and Howard Park neighborhoods of San Carlos shot through the $800,000 mark, and in some cases even went over $900K. Many folks in the community and in the real estate business felt that this surge meant that you would never see a home for sale on the west side of San Carlos with a price that started with the number “7” ever again.
How times have changed…
The venerable 2-bedroom/1 bathroom home configuration that sprung up like weeds in San Carlos during the post-World War II construction boom has been the defacto “starter home” in White Oaks and Howard Park for as long as I have lived here. (That’s exactly the home we first purchased in San Carlos many years ago, although the previous owner slapped on a very shoddy 2nd bathroom.) And despite all of the remodeling that has taken place in San Carlos, many of these 2/1’s are still out there — 90 of them changed hands in the last two years alone!
What’s happening now?
In the past few quarters, the selling price for most of these 2/1’s quietly slipped back into the $700,000’s. The home pictured at the top is 113 Belvedere Ave which just recently sold for $755,000. And this was a nicely remodeled 2/1, as well…which makes this even more remarkable. The one below is Loren Dakin’s listing at 1340 Elm St which sold for a touch over $740,000.
In fact, in the past 6 months, there have been 20 homes sold in San Carlos of the 2-bedroom/1-bath (or smaller) configuration, and 70% of them sold below $800,000.
Why is this happening?
Aside from the obvious answer of “It’s the economy, dummy!”, this sector of the market is impacted a little differently than the rest of San Carlos. If you listened to my recent podcast, you’ll recall that I talked about how the lack of consumer confidence is a bigger negative factor in San Carlos than the nationwide credit crunch. Well, this is the exception. People looking to buy these homes are overwhelmingly first-time buyers, and the credit crisis hits this group right between the eyes.
This new market is forcing buyers to bring more money to the table. Whether it’s a 20% down-payment that may be required by a bank, or the desire to keep the loan out of the much higher JUMBO range, today’s buyer may need to bring $150,000 cash (or more) to the table to make it all work. In this economy, that forces many potential buyers back into the rental market to wait out the storm. Consequently, these homes sit a little longer, and the price starts to drop.
If you are new to this area, you’re already shaking your head at the insane irony of this whole post. It’s big news here when a 65-year old, 1,000 square foot home sells even close to $700,000. But for that same $700k, this is what you could get in Wake Forest, NC…
(I know this isn’t a fair comparison. The truth is that this home isn’t $700k. It’s listed for $699,000…I just rounded up. And it’s (only) 4,700 square feet on 1.68 acres of land…But you won’t get a 3-car garage with this home. A 5-car garage, yes. )
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