The Vibe vs the Reality.
No, I’m not crazy. But I have sensed a palpable change in the San Carlos real estate market over the past few weeks. Certainly not in the lack of multiple offers — I was involved in the multiple-bid frenzy on 1600 Elm Street, and the home at 100 Manzanita will be sold today, most likely with a whole slew of offers. But the break-neck pace of the number of homes changing from “active” to “pending” that we saw back in March just seemed to have ratcheted itself back a notch in the past couple of months. Back then, just about anything with a “For Sale” sign sold almost immediately. Now, there are several homes that I thought would absolutely fly off the market that are still for sale. Hmmm…
This got me to thinking whether my internal compass was just off, or if the market has taken a bit of a breather over the past 60 days. So when in doubt, I always look at the numbers…because the numbers don’t lie.
The chart below shows two metrics for single-family residences in San Carlos that are excellent gauges of the activity of the market: Active Inventory, and Pending Sales. And both are trending in surprisingly different directions, considering everything that’s happening this year:
The number of homes for sale, while still a fraction of the normal inventory we’d see in the Spring, has been on the increase (see the yellow arrow). But the number of homes going into contract (pending) has been on the decline since March. In fact, in April and May of this year, there were actually fewer homes to go pending (63) than in the same two months of last year (72), and 2011 was considered to be a “rebound” year!
And if you look at the pending sales figures for the last 3 months, it’s exactly the same number (102) as last year during the same period. So what’s with 2012 being a blowout year?
There are several reasons that I’ll offer that may be behind this apparent anomaly in the market.
- Inventory – Despite the upward trend of available homes for sale, the inventory level remains about half of what we had at this point last year. And as I’ve stated numerous times on this site, you can’t expect significant growth in the market without the fuel to drive it.
- Buyer Selectivity. Buyers aren’t jumping at anything as it may have appeared back in March. Some are holding out for the right home in their target neighborhood, even if that means waiting for 6 months or more. Certainly, a clean 3BR/2BA home in White Oaks or Howard Park would sell in a nanosecond in this market. But those listings just aren’t there. And some buyers are simply opting out of the bidding frenzy when those rare opportunities come up.
- Reload. Some buyers have grow frustrated with the process, especially those who have been out-gunned in several multiple offer bids. They are taking themselves out of the chase for the time being, and are focusing on increasing their buying power (i.e. saving cash) and will come back on the market in the fall of 2012 or early in 2013.
Those That Do Sell, Do Well.
But these statistics should not necessarily be a cause de celebre for potential home buyers in San Carlos, because those homes that do sell are still selling very quick and are fetching good prices. Just take a look at the chart below…
In the month of May, the homes that did sell fetched 103% of the their list price, on average. This means that bargains have been few and far between. And the average days on market fell to 24 days — but in reality, homes with the right stuff are usually gone after the first week on the market.
The message here? If there’s a home that catches your eye, it’s still likely doing the same to others. So be ready to do battle.
The Bottom Line.
The bottom line is that the real estate market is still very healthy in San Carlos, but it’s not the runaway freight train that it may seem at times. Multiple offers are still very common, but not everything is selling in the first week. You can count on being in a multiple offer battle for nice homes in good neighborhoods, regardless of the price. But if you’re willing to be flexible on your wish list, you can still find a place without getting sucked into the multiple offer vortex.
Perhaps a little balance and sanity is wedging its way back into the market? We’ll see..
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