The first half of 2016 is officially in the books, and the San Carlos real estate market has once again chalked up some mind-blowing gains, as you will see in the various charts below. The average price of a single-family home in San Carlos experienced double-digit growth as compared to the same period in 2015. This should come as no surprise to anyone who has been watching this market since we have been seeing this kind of increase in pricing consistently over the past 5 years.
However, one trend did change in the first half of 2016, and that was the number of listings to hit the market. Thanks to a very robust second quarter, the number of new single-family home listings in San Carlos actually posted a small gain over the first half of last year, finally reversing a drought that had a virtual stranglehold on our market for most of the past decade. This sudden surge of inventory starting in April significantly changed the dynamics of local market almost immediately. While it was a welcome relief for home buyers who were still in the market, it certainly forced many home sellers and agents to re-evaluate their pricing strategies and their expectations for the sale of their homes.
Other economic factors played a part in the market performance in the first half of 2016. For the first time in probably 5 years, the technology sector that fuels the local housing market was showing signs of cooling off. Several tech titans such as Intel and Hewlett Packard actually announced plans for significant layoffs, and word on the street is that the hiring pace at tech bellwethers Facebook and Google tapered off in the first half. The end result is that there was a very perceptible “leveling” of the real estate market over just the last few months — this is a topic that we’ll address in detail in a separate post tomorrow.
Here are some of the key metrics for the San Carlos housing market for the first half of 2016:
As you might have already sensed, home prices indeed continued their upward trajectory in the first half of 2016. Compared to the same period last year, the average price of a single family home in San Carlos jumped by over 14% to an eye-popping $1,800,000 figure. Not to be left out of the party, the price of a condo or townhouse grew at a much faster pace, eclipsing the $1,000,000 barrier for the first time.
Price per square foot (PPSF) is another metric that we use to normalize the pricing across all home sizes to see if there is a particular trend. Looking solely at the PPSF data for single family residences, we see that average square footage cost increased at a slightly lower rate (10.3%) than did the the average sales price (14%). But it was still a significant rate of increase compared to 2014-2015, when the PPSF only increased by 4%.
New listings for both single family homes and condos/townhouses both saw increases in the first half of this year:
While a bump of 11% in listings may qualify as modest by most standards, it was significant in that it finally reversed a plummeting trend that has spanned for at least the last 5 years. But the most interesting statistic from this graph is one that you cannot see: Of the 160 new listings to hit the market in the first half, 49% of all of the listings during the first half of the year hit the market in just the two months of April and May. We will talk about this statistic a bit more in a post later this week, but this spike in listings definitely had a profound effect on the behavior of the real estate market both here in San Carlos and all along the Peninsula.
The final metric that we will look at is the total number of units sold in the first half of 2016:
This is an interesting chart because it points out a small but very significant divergence in the data for 2016. Even though the number of new listings in 2016 increased by 11% from 2015, the number of closed sales during the same period dropped by 4%.
It is possible that this particular data is influenced by sales outside of the January-June timeframe — in other words, sales that closed in January were likely listings from December of 2015, and contracts that were booked in June have likely not registered as closed sales yet.
But even when you look at “Pending Sales” for the first half of the year, San Carlos only eeked out a 4% increase over 2015, despite an 11% increase in total listings.
What does this data seem to implicate? Some homes are taking longer to sell, or simply are not selling at all. It’s a change that we sensed almost immediately when the inventory jumped from the low teens to the high 20’s in early April, and carried throughout much of the second quarter of 2016.
It’s an interesting turn of events, because it marks the first time in probably the last 5 years that we’ve seen the market actually push back, and not everything is sold within the first two weeks of being listed. We will dive more deeply into that phenomenon in a separate post later this week.
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