That’s the word that probably best describes what transpired in the San Carlos real estate market in 2012. Four years after the bottom fell out of the local real estate market, it’s now safe to say that our local real estate market has indeed recovered. That’s not to say that each and every price segment is now above the levels of the bubble in 205-2007 — certainly, there are a few homeowners who purchased during that time-frame that still haven’t fully recovered from the market drubbing.
But for virtually all price segments, 2012 will be remembered as the year when the market came roaring back. It’s a trend that I actually started sensing in the latter half of 2011, and all of the elements were in place for an absolute blowout year in San Carlos in 2012, except one — inventory. Bear in mind when you look at the numbers below that this performance was achieved despite an approximate 17% drop in new listings from the previous year! The increase in home sales would have been much more dramatic in the graphs below had there been more homes for sale last year.
To better illustrate the magnitude of the recovery of our local market, I decided to change the format of this report from previous years and pull the scope back a little to show the 5-year profile for various key metrics, as opposed to focusing solely on the past 12-24 months.
For a complete list of what homes sold in San Carlos, click here: San Carlos 2012 Sold Price Analysis
Sales and Prices Head Upward.
If you were in the market for a home in San Carlos last year, then none of what you’re about to see below should come as a surprise. Despite the lack of inventory, the number of homes that sold in San Carlos jumped to a level not seen since 2005. The 317 homes that sold in 2012 represents a 14% jump from 2011, and a whopping 34% recovery from the trough of 2009. And as I stated at the outset, there would have been far more than 317 homes sold in San Carlos had their been sufficient inventory to cover the demand:
After several years of virtually no growth, the average sales price of a single-family residence in San Carlos jumped from $960,083 in 2011 to $1,073,453 in 2012 — an increase of 12%. As you can see from the chart below, prices recovered to a point that was even higher than the pre-credit crash of 2008:
The Sweet Spot.
One question that often comes up is which price segment sees the most sales in San Carlos. The chart below tells a very interesting story:
The $800K -$1M price range experienced the most sales with 75, or 24% of the total market. And the range between $600K-$1.2M remains the “sweet spot” for home sales in San Carlos, as it accounted for a whopping 62% of all homes sold last year in San Carlos.
If there was a downside to the real estate market in 2012, it was in the inventory of homes for sale. For reasons that we still don’t fully understand, the number of new listings plummeted in 2012 — thus creating an ultra-competitive market for home buyers. Perhaps the market recovery seemed to catch sellers by surprise last year and they weren’t ready to cash in. Or maybe home owners are simply staying put, and there will be less turnover than normal going forward? Only time will tell.
But one thing is abundantly clear — that impressive 14% increase in home sales that we saw in 2012 was achieved despite a 17% drop in the number of new listings compared to 2011. In fact, the 327 single-family listings in 2012 was the lowest number in the past 10 years.
This makes you wonder how many homes would have sold in 2012 had there not been such a shortage of homes to choose from?
More of the Same in 2013.
What’s in store for the new year? As we head into 2013, all of the elements are still in place that made 2012 such a challenging year for home buyers:
- An improving job market.
- Historically low interest rates.
- Strong stock market.
- Low housing inventory.
There are still quite a few “carry-over” buyers from last year, and there will be a plethora of new buyers coming on the scene in 2013, so expect this to be another extremely competitive year if you’re looking to purchase a home in San Carlos or any of the desirable neighborhoods on the Peninsula. Unless we see a significant influx of new inventory, expect multiple offers and escalating prices well into the new year.
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