Sales Up, Prices Down.
Does that mantra sound familiar? It should, because it’s exactly the way that we kicked off the 2011 Mid-Year Report for San Carlos. The trend of very strong home sales that has characterized the San Carlos market so far this year continued right through the third quarter. In fact, San Carlos is on track to have its best year in unit volume of home sales since way back in 2007, which was the end of the last real estate boom.
But prices are not still following the uptick in sales, even despite record low interest rates that have become too tempting for even the fence-sitters to pass up. That may sound perplexing to those of you who have been beaten up in a few multiple offer battles and watched prices escalate on a few select homes — but on average, prices are lagging about 2% below last year.
Pending and Closed Sales.
Homes have continued to sell at an impressive pace this year in San Carlos. Each quarter has surpassed the same year-ago quarter by double digit percentages in unit sales, and the third quarter was no different. Take a look at the graph below:
There are a couple of interesting trends happening in this graph. First, and probably most important, is the continued upward surge in pending sales. As you can see in the table below, San Carlos is ahead of last year’s pace by a whopping 24%. And, as you would expect with an increase in pending sales, closed sales are also way ahead of last year too. But what’s really interesting about both of these stats, is that they’re happening in an environment where there’s 25% less inventory than the same period of a year ago. Buyers are out in force, but they have much less to choose from than they did last year. You may have noticed in the weekly San Carlos Real Estate Week in Review series that the Active-to-Pending ratio has hovered just above 1 for most of the summer. Now you know why…
|Key Metrics||Q3 2011||Q3 2010||YTD 2011||YTD 2010|
||84||71 (+15%)||247||200 (+24%)|
||84||65 (+29%)||217||175 (+25%)|
Prices Remain Flat
As we highlighted in the mid-year report, an interesting paradox developed when we analyzed the sales data. While unit sales were climbing to their highest level in 4 years, prices were not following suit. Take a look at the following 3 graphs:
Just like what happened in the first half of the year, the average sales price in San Carlos in Q3’11 lagged behind the equivalent period last year. For the full year to date, prices are still remain about 2% below where they were in 2010. Even the average price per square foot is off by about 1%.
|Key Metrics||Q3 2011||Q2 2010||YTD 2011||YTD 2010|
|Average Sale Price
||$938,670||$983,300 (-3.2%)||$959,890||$980,330 (-2.0%)|
|Median Sale Price
||$907,000||$957,670 (-5%)||$932,330||$929,780 (+0.3%)|
What Lies Ahead.
If October is any indication, there will be a strong finish to the San Carlos real estate market in 2011. We will exit 2011 with the highest number of homes sold since 2007, as the final char below suggests. This is an amazing recovery from the credit crash of 2008 and all of the uncertainty that followed. Prices may continue to lag behind the 2010 figures for the remainder of the year, but they appear to be stabilizing.
With the Fed committed to keeping rates at rock bottom until 2013, look for sales to continue to be brisk up until the holiday season. With 30-year fixed rate mortgages readily available in the low 4% range (with no points) and even below 4% if you’re willing to pay a point, even the fence sitters are finding this to be too good of a market to pass up.
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