I mentioned in a previous post that the performance of the San Carlos real estate market in the first three months of the new year would likely set the tone for what is going to happen in all of 2009. If that statement turns out to be true, then 2009 has the makings of being an ugly year.
Since today is the final working day of the month and no escrows are scheduled to close, I figured it would be safe to take a close look at the data for January. Ugh… At first blush, it wasn’t too bad. The data showed that 10 homes sold in January, and this would have been down only 2 from the 12 that sold in January of 2008. Upon further review though, 5 of the 10 homes that show as January sales actually recorded on the last 2 days of December. What does this mean?
Only 5 homes closed escrow in San Carlos in all of January 2009.
…or a 58% reduction from January 2008.
One way to predict the performance of an upcoming month is to take a look at the pending sales. This is a reasonably accurate gauge since the average escrow period is 30 days or longer; in other words, if it’s not already pending today it won’t likely close in February. Taking that logic into account, here’s what February looks like:
- 5 Pending No-Show: (Contingencies likely all removed, highest probability of closing escrow.)
- 8 Pending with Show: (Contingencies likely still in place, consequently lower probability of closing escrow.)
- 1 Pending with Release: (Home is in contract, but some sort of release clause is in place — possibly contingent on the sale of the buyer’s home.)
Assuming an 85% closing percentage (which is admittedly optimistic,) this equates to 12 home sales in February 2009 which equals the same figure of February 2008.
What does this all mean? Well, numbers are funny — while they’re very “black and white,” you can still look at them from an infinite number of angles. In this case, the San Carlos real estate market is starting off the year about 30% behind last year. However, if you look at trends and directions, there’s growth from Jan-Feb of 2009, versus no growth in the same period of 2008.
What this really means is that March 2009 will be the month of reckoning in San Carlos. It should spell out very clearly whether we’re starting to pull out of a funk, or if we’re destined to fall behind what was an already soft 2008.
We’ll do another analysis just like this one at the end of February. Should be very interesting…
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