A Jumping January.
What started out as such a promising year for home buyers in San Carlos has really fizzled over the past 4 weeks. At the beginning of the year, the market seemed to jump right out of the gates, with a surprisingly robust activity level compared to a typical January. This bump in activity was spurred on largely by the fact that there were more new listings to hit the market this January than in any January since 2011 — which the first chart below clearly illustrates. This made home buyers very optimistic that there would be more homes to choose from this year.
In a post that I wrote on this subject back in January, I analyzed the listing data to see if there was some sort of correlation between the number of new listings in January, and how the results ultimately turned out for the entire year. In a nutshell, the data indeed tracked pretty consistently — a strong January for new listings portended a strong overall year.
Here’s a chart of how the past eight January’s have performed…
If you buy into the correlation theory, then one would expect that February would have been a similarly strong month. So what happened?
Unfortunately, February did not get the memo from January. Despite the fact that January of 2015 had the highest number of new listings during the same period over the last four years, February did not follow suit. Quite to the contrary, the 20 listings registered in February of 2015 represent the lowest number of new single-family home listings for any February over the past 8 years. And that is putting a big hurt on home buyers who have been desperately waiting for some relief in this overheated market.
So the great start we had at the beginning of this year essentially fizzled out in February. The pullback in listings in February was so severe that when you roll the two months together (see below), it wins the award for the fewest number of listings in a Jan-Feb over the past 8 years:
This explains why home prices in San Carlos have climbed to unbelievable heights over the past 4 weeks (even more unbelievable than they already were.) Buyers are simply panicking because there was an expectation that more inventory was going to come on board, and we simply didn’t see it. As of this post, there are a whopping 6 homes for sale in San Carlos. It feels as if all caution is being thrown to the wind, and buyers will simply pay any price to get a home in this depleted market. And San Carlos is not alone in this respect. We are seeing eye-popping prices coming out of Belmont and Redwood City, even in neighborhoods that you wouldn’t expect to see $1000/sq foot for a home.
Strap on your seatbelts, folks. It’s going to be a bumpy ride until we get some more inventory to settle this market down a bit.
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