Are Things Looking Up?
Back in January of this year, I posed the following question in a my annual preview podcast: Will 2010 Be a Better Year for San Carlos Real Estate? In that podcast, I stuck my neck out and predicted that yes, we will see an increase in San Carlos home sales in 2010, thus ending two years of consecutive declines. The main reason behind this prediction was simply that the market conditions heading into the first quarter of 2010 were far different than they were during the same period a year ago — more credit available, better interest rates, and higher demand. I also cautioned that lack of inventory and the high unemployment rate could curtail any growth.
So now that the first quarter of 2010 is in the books, how is my prediction turning out?
There’s a ton of information in the graph below. Not only are the number of sales tracked by month, but also the number of pending sales, and the general inventory situation:
Here are some of the key metrics pulled from this graph, as well as from the MLS statistics….
|Key Metric||Jan-Mar 2010||Jan-Mar 2009||Difference|
|No. of Sales||35||33||+6.1%|
What this data tells us.
Indeed, the number of closed sales increased by over 6% compared to the same period in 2010 — so my prediction is holding true so far! But what’s important to notice is that this number increased despite the fact that there were almost 21% fewer new listings during that period. After witnessing quite a few multiple offers in Q1, I think it’s safe to say that the growth would have easily exceeded 6% had there been more homes to choose from. The lack of inventory that I harped about all during Q1 seems to have throttled a portion of our growth.
As we exited March, there were still far more buyers looking for homes in San Carlos than there were homes to choose from, particularly in the 3BR/2BA, sub-$1M sector. After all, when 11 buyers compete for a single home like they did for 172 Lyndhurst, there can only be one winner…and the other 10 are likely to be still out there looking.
According to the data above, the trend of increasing sales over 2009 should continue, simply because the number of pending sales in Q1 2010 increased by 17% — that means that more homes should close escrow in the upcoming quarter, barring some huge attrition of this number.
What’s also helping is the recent surge of inventory. Over the past few weeks, the San Carlos market enjoyed a nearly 66% increase in homes for sale, topping the 50 mark for the first time in about 6 months. This injection of inventory should relieve some of the pent-up demand we witnessed in Q1.
Cautions? Sure. As I discussed a few weeks ago, interest rates are starting to creep upwards as the Fed withdrew their involvement in the home purchase market. Any significant increase in interest rates weakens buying power, which then serves to drive home prices downward. And the unemployment hasn’t improved much over the past few quarters. These two factors could serve to stall out any sustained growth.
But we’re now two weeks into the new quarter, and there seems to be nothing holding back the market in San Carlos. Buyers are still out in force, and multiple offers continue for those “to die for” homes. It will be very interesting to see this same report again in 3 months, but right now we look to be in pretty good shape.
Update: Past Q1 Data..
Per the great suggestion by blog reader Ken Wilson, here’s a quick snapshot of the Q1 periods in the San Carlos market over the past 6 years. Interesting to look back at the “boom market” of 2005: 20 days on market average, and homes fetched a whopping 108% of list price!
|No. of Sales||35||33||51||71||50||82|
|% to List||99.06%||95.92%||99.79%||101.07%||99.11%||108.12%|
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