Much to the chagrin of those who have not yet planned their summer vacation, or to those who have not yet been successful finding a home to purchase in San Carlos — the first half of 2012 is in the books. And what a year it has been so far, with some things happening as expected, and others completely unexpected.
I expected (and predicted at the beginning of the year) that 2012 would be a steady continuation of the linear rebound in the San Carlos real estate market that we saw in 2011. Nothing spectacular – just slow steady growth as the local economy got back on its feet. But the un-expected happened: Buyer demand virtually exploded overnight in Q1, as the lure of low interest rates, a strengthening stock market, and a groundswell of consumer confidence got even the most reluctant buyers off the sidelines and into the game.
Unfortunately for these prospective buyers, the landscape was far more competitive than it was just a few months back in 2011. The surge of new buyers was met with a dearth of new listings, creating an unprecedented imbalance in the market that clearly favored the home sellers. Consequently, the homes that did make it to the dance in the first half of the year were met with multiple offers and rewarded with some breathtaking final sales prices. This trend was even a cause de celebre for homeowners who didn’t have their homes on the market, as they watched their equity escalate along with the rest of the market.
So how did the numbers shape up for the first half of 2012?
Home Sales Up.
The most primitive and logical metric to gauge the health of a housing market is simply the number of homes sold. The chart below shows the number of single-family residences sold in San Carlos over the first 6 months of 2012:
Now, unless the subject matter is debt, interest rates, or inflation, charts that go “up and to the right” are generally a considered to be good things. And this one is no exception. This clearly illustrates a housing demand on steroids. But despite this sudden overwhelming demand for homes in San Carlos, not all was rosy in the City of Good Living.
Any good wildfire needs fuel to feed its growth, and a real estate market is no different. But in 2012, the inventory that was desperately needed to satiate the demand was conspicuously absent. For much of the year, the inventory of homes for sale seemed to be stuck in the 20’s — about a third of what you’d expect during the spring season. There were even several weeks where the number of homes for sale dropped into the teens.. Can you say “seller’s market”?
Homes were virtually being bought up as fast as they were hitting the market. Here’s a perfect illustration of that effect:
This chart simply shows what anyone who was looking to buy a house this year already knew: Stuff was getting snapped up as soon as it hit the market, which meant the inventory never got a chance to grow to anything resembling a normal level. A picture is indeed worth a thousand curse words…
2012 vs 2011.
No report would be complete without some sort of relative comparison, so let’s look at how some of the key metrics stacked up to the previous year:
|# of Homes Sold
|Average Sales Price
|Median Sales Price
|Average Days on Market (DOM)
|Average $/sq foot
That’s an interesting mish-mash of numbers above. The only two key areas that 2012 did not show an increase in over 2011 were in Median Sales Price and $/sq foot. This seems to indicate that while there were fewer homes sold in 2011, those that did sell were at the higher end of the price spectrum.
If you’re interested in a list of all of the homes that sold in San Carlos is in the first half of 2012, simply click here: Homes Sold in San Carlos: 1H 2012
More of the Same…
As we head into the second half of 2012, you can expect more of what you saw in the first half. Despite a strengthening local economy, it seems as if global economic mishaps (Greece, Spain) are keeping mortgage interest rates at rock bottom, which is great for home buyers. And despite a slight increase in inventory headroom that we saw in late Spring, don’t expect to have a plethora of homes to choose from in the summer and fall. Inventory levels are expected to remain tight throughout the year.
Add to that a steadily growing Silicon Valley workforce, and the recipe is in place for a strong second-half of 2012.
Oh, yeah.. let’s not forget about the F-word (Facebook) too. If there is indeed a sixth month lock-down period from their IPO, that means big money becomes available for some later this year. It may become a factor in San Carlos, or it may not. Only time will tell.
So enjoy your summer…it’s already half over!
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