What’s the Hottest Segment?
As I was putting the finishing touches on the 2012 Year in Review article that posted on Monday, I kept going back in my mind to one particular statistic that was called out in that report: Average Sales Price. It’s one of the most widely used stats that’s used to benchmark the relative growth of a real estate market, and as you may recall from the report, the average price of all single family residences that sold in San Carlos in 2012 jumped by about 14% from 2011. That’s a pretty significant increase in just one year.
But the question that kept coming back to me was this: Which home segment (i.e. bedroom count) saw the biggest increase in price, and accounted for the 14% jump? The most obvious answer in my mind was the 3-bedroom sector, because every year it’s the predominant home configuration to sell in San Carlos, and it seems to be the setup that most buyers are looking for. In 2012 that was indeed the case, as it accounted for 45% of all homes sold in the City.
But does that mean it enjoyed the biggest price grown in the San Carlos market in 2012?
The answer may surprise you (of course it will…otherwise, why would I write this post?!!) Take a look at the 4 charts below — they show the average sales price for single family residences sold in San Carlos in 2011 versus 2012 for 2, 3, 4, and 5 bedroom homes (respectively)…
While the 3-bedroom sector of San Carlos certainly had the most sales in 2012, it had the smallest growth in average sales price of all of the 4 segments above! I found this to be quite surprising, considering the overwhelming demand for 3-bedroom homes in San Carlos.
No, the segment that saw the biggest price increase in 2102 was the 5-bedroom home segment. Although it accounted for only 9% of the number of homes sold last year, it experienced a quantum leap of nearly 35% in the average price. Not coincidentally, the 4-bedroom segment (27% of all homes sold) wasn’t too far behind at a nearly 16% growth.
It’s the Family Home.
What conclusion can you draw from this data? Although the results may be a bit surprising at first glance, it really isn’t when you consider the evolving demographics of the City of Good Living. There are simply more families with multiple children that are now living in San Carlos, and their needs have outgrown the bread-and-butter 3-bedroom home that has become the staple of the San Carlos real estate landscape. You need look no further than the exploding enrollment projections from the San Carlos School District to understand that the population is getting younger.
And since there are far fewer 4 and 5 bedroom homes available, the imbalance between supply and demand in these segments is far more critical than in any other segment in San Carlos. If you’ve wondered why it’s so tough to find a 4 or 5 bedroom home in San Carlos, now you know why.
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