Big Rebound for Condos and Townhomes.
A few weeks ago, we did an in-depth analysis of the 2014 sales performance for all single-family home sales in San Carlos. We took a look at such metrics as Average Sales Price, Number of New Listings, and Average Days on Market, and compared them to the performance over the past 7 years. The numbers were quite revealing, as they confirmed that we are indeed on a massive upswing in pricing. But some of the metrics were also a bit surprising, such as the fact that we experienced the lowest level of new listings in San Carlos than any point in the last 10 years.
In this post, we’ll take a similar look at the condo and townhouse market in San Carlos, and how it has performed over the same period. For the purpose of this analysis, there is no differentiation made between condos and townhouses in these numbers — for simplicity, the are grouped together and the terms are used interchangeably.
Prices Surge Upward.
As the local economy improved and house prices began their breathtaking ascent, condos and townhouses became very attractive alternatives to those buyers who were simply priced out of the single-family home market, or who did not want the hassle of maintaining their own home. Consequently, prices rose over 12% from 2013, and recovered a whopping 64% from the trough of the market in 2011. Back in those dark days, quite a few condos were being sold as short sales, and unfortunately a disproportionate number went to foreclosure. The $574,227 figure in 2014 squeaked ahead of the same metric posted at the peak of the market in 2007, thus marking a full recovery in prices from the depths of the recession.
The chart for the median sales price of condos and townhomes looks similar, as you might expect. The median price for townhomes and condos rose by 12% from 2013, and an amazing 75% from the bottom of the market just 3 years ago.
These two charts should make condo and townhome buyers very happy. When the real estate market tanked during the recession, condos and townhomes in San Carlos took a bigger beating than did single family homes. The precipitous drop from the peak values of 2007 put many homeowners in a world of hurt, forcing many short sales and foreclosures. But for those homeowners who were able to ride out the storm, prices have fully recovered.
Fewer Units, Faster Sales.
Aside from the surging local job market and corresponding lack of affordable housing, part of the reason why prices increased so rapidly for condos and townhomes in San Carlos was simply a lack of inventory. Demand is high, supply is low, and prices go up. The inventory situation for this segment of the market is not nearly as dire as what we reported last week for single-family homes, which hit a 10-year low for new listings in single year. The condo market was slightly down, with 95 total units hitting the market. It is certainly not the lowest figure in recent history, but it’s near the bottom. Here is a look at the past 7 year’s inventory performance:
Finally, a good indication on the relative health of a given market is how long it takes on average to sell a property. Back in 2009 just after the credit crisis, it took nearly 2 months on average to sell a condo in San Carlos. But over the past two years, that average number has plummeted to just over 2 weeks – very similar to what happened with single-family residences. The chart below reflects the rapid rebound in popularity of condo’s and townhouses in San Carlos, and how this market segment has rapidly gained favor with home buyers.
What Lies Ahead?
Unlike the single-family home market in San Carlos whose unit growth is essentially capped due to a lack of land, there is indeed room for growth in the condo/townhouse market in San Carlos. Right now, there are at least a half a dozen condo/townhouse projects in various stages of planning that, if approved, will add a decent number of units to the mix. Most of the projects that I am aware of are either on Laurel Street, or just around the corner on San Carlos Avenue, which will make them super attractive to buyers who want to be close to downtown. Rest assured that these projects are NOT on the scale of the looming towers that are being built in Redwood City, but rather a collection of smaller, boutique-sized units. I’m especially excited for these new developments, because a number of them will be replacing older, unattractive structures that are currently there.
So this development trend, along with the larger plans that are in place with Wheeler Plaza and the Transit Village, will greatly alter the density and the vibe of downtown San Carlos over the next decade. This will create some excitement, and of course some challenges as the City of Good Living emerges from its perception as a sleepy bedroom community.
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