The San Carlos Real Estate Week in Review: 5-12-12.

San Carlos Real Estate Summary.

New listings exceeded the number of pending sales this past week, resulting in a 24% uptick in the number of homes for sale in San Carlos.  But even with 26 homes currently for sale, that represents about half of what we would see in a normal year at this point in the spring market.   With the end of the school year just around the corner, it will be interesting to see what impact (if any) that will have on the temperature of the real estate market in San Carlos.

Here are the numbers for the week:

By The Numbers.

Below is a high-level snapshot of the market performance for single-family residences in San Carlos. This data is for the week ending 5-12-2012:

>>> Click Here to Read the Full Post
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The San Carlos Real Estate Week in Review: 5-5-12.

San Carlos Real Estate Summary.

Pending sales dropped significantly this week, with only 4 homes going into contract.  This is most likely due to a lack of inventory to choose from, and not reflective of a lack of buyer interest.    Several of the listings that hit the market this week will be pending this coming week too, as buyer interest remains strong.  But to give you an idea of how lean the inventory is, there are currently only 2 homes for sale in all of the White Oaks, one in Oak Park, and zero in Howard Park.   So for home buyers looking for the flats or wanting to stay close to downtown,  there’s very little to choose from right now.

Here are the numbers for the week:

By The Numbers.

Below is a high-level snapshot of the market performance for single-family residences in San Carlos. This data is for the week ending 5-5-2012:

>>> Click Here to Read the Full Post
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Not a Friendly Place for First-Time Buyers.

Outside the Comfort Zone.

Last week we talked about how difficult the current competitive real estate market is for the move-up buyers in San Carlos.  Many of these homeowners are effectively land-locked in their existing homes, simply because they can’t find a home to move up to.  And when they do find one, they can’t put together a competitive offer because many of them have to sell their existing home first.

But move-up buyers aren’t the only ones feeling the pain.  There’s another very significant group in the real estate machine that is probably not enjoying this market one bit :  The first-time buyers.

Forget about the superheated market we’re in right now for a minute.  Buying a house in a normal market is still a process that pushes most buyers outside their comfort zone.  It’s the single biggest check that most have ever written in their lives, so it’s always accompanied with an avalanche of uncertainty,  nervousness, and a large dose of second guessing.

So when the heat gets cranked up under a market like we’re experiencing now, first-time buyers get pushed even further out of their comfort zone.

Time and Space.

In a balanced real estate market, buyers can count on two elements that enable them to educate themselves on the home and therefore (hopefully) make rational decisions:  Time and space.    Buyers need time to see the home, sometimes multiple times, and to do their due diligence such as a studying a comparative price analysis, and conducting the full gamut of property inspections.  Space is just the complementary effect of not having to worry necessarily about hordes of other buyers looking at the same house at the same time.

But in the crazy market that we’re experiencing now, time and space evaporate.   Most homes right now in San Carlos are selling within 2 weeks of when they hit the market — some much faster.    Today, if you wait until an open house to see the home for the first time, you may not have the time you need to understand the house, and to get comfortable with the amount of money that you’re about to part with.

Time is evaporating on the back-end of the transaction too.  Instead of getting 1-2 weeks to conduct inspections, buyers are now being forced to crop the inspection time down to a matter of days.   And that’s if they even have inspections done at all.  Things are getting so competitive that non-contingent offers are becoming commonplace again.

And forget about being the only one to write an offer on a home.   Even complete tear-downs are getting multiple buyers competing for the right to tear it down.

Driver’s Ed.

Buying a house is somewhat analogous to learning to drive a car.   You want to tackle freeway driving for the first time perhaps on Highway 280 at about 2:00 in the afternoon, and NOT by navigating the Bay Bridge during rush hour.    But the latter is what the market looks like right now, and it’s making first-time buyers feel rushed, frustrated, and VERY nervous.

But if you want to compete in this market, conventional wisdom may have to take a back seat.  Buyers who are landing homes in today’s market are thinking outside the box in their approach to buying the home.

Of course many are simply spending outside the box to get what they want.
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The San Carlos Real Estate Week in Review: 4-28-12.

San Carlos Real Estate Summary.

After a couple of weeks of steadily increasing inventory, the buyers kicked it into gear again this past week and cropped the available number of home for sale in San Carlos back down to 20, a decrease of 31% from where the week started.  Ouch.  It certainly didn’t help matters that there were only 3 new listings to choose from.   But for the time being, we’re back to a severely constrained market which is going to make it tough for buyers again.

Here are the numbers for the week:

By The Numbers.

Below is a high-level snapshot of the market performance for single-family residences in San Carlos. This data is for the week ending 4-28-2012:

>>> Click Here to Read the Full Post
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Have the blog delivered to you! Subscribe to the White Oaks Blog for free by clicking here. And while you’re at it, be sure to follow the White Oaks Blog on Facebook at https://Facebook.com/WhiteOaksBlog , and on Twitter @WhiteOaksBlog.
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Tough Sledding for Move-Up Buyers in San Carlos.

Stuck in the Middle.

You would think that any home seller in San Carlos would be absolutely thrilled with the current condition of the real estate market,  with its tight inventory,  endless stream of well-heeled buyers, double-digit multiple-offers, and prices soaring at a seemingly unabated rate.   Who wouldn’t want to list their home in a market that so overwhelmingly favors the seller?

But there is a small legion of home sellers in San Carlos right now who would absolutely love to partake in the spoils of this market, but simply cannot.  Unlike homeowners who are moving out of the area, or are perhaps downsizing, this group of sellers wants to stay in San Carlos– perhaps in a larger home or in a different neighborhood.   They’re the move-up sellers, and right now they’re absolutely paralyzed in this market.

Infinite Selling Power, Zero Buying Power.

The primary problem that the vast majority of move-up sellers face is that they usually need to sell and close escrow on their current home first before they can complete the sale on their next home, since they’re “buying up” into a larger mortgage.  Unless they just hit the IPO jackpot, or somehow have an unusually high amount equity in their existing home, this is a rigid requirement for most move-up buyers.   So this means that once they’ve identified their target move-up home, they have to write an offer that’s conditional on them selling their current home first.

In a normally market that’s balanced and has a healthy level of inventory, many sellers would be open to taking a conditional offer from a buyer.  But in the tightly constrained market that is seeing more non-contingent and all-cash offers, a conditional offer falls to the bottom of the stack just about every time.    The ultimate irony here is that these very same market conditions serve to remove almost all of the risk from the conditional offer — the move up buyer can sell their house in a nanosecond in this white-hot market, but their buying power is negligible compared to non-conditional and non-contingent offers.

In other words, they have infinite selling power but zero buying power.

Conspicuous by their Absence.

Move-up buyers are a critical cog in the real estate food chain.  In a typical market, not every home seller is retiring or relocating out of the area for job reasons.   A significant chunk of the inventory that comes on the market is from those home owners who move within San Carlos, and they’re a vital piece of the machine — on one hand, they create supply, while on the other they help consume inventory.

But right now, many move-up buyers have reluctantly decided to ride out the storm.  They’re using this time to stash away more money for a larger down payment, and are waiting for a  balanced market that is more favorable to buyers.   Many will pin the lack of inventory on the “Facebook Effect” (people waiting to list their home until that busload of FB millionaires cruises through town), but I’m convinced that the lack of move-up buyers is playing a far large role right now.

Their absence is definitely being felt…
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Home Renovation: Weighing Utility vs Return on Investment.

“Should I Do This?”

Now that the economy is showing signs of sustained recovery and cash is flowing back into stock portfolios and bank accounts, homeowners are starting to reconsider those home renovation projects that were put into the deep freeze when the economy hit the skids a few years ago.    That new kitchen or master bedroom suite is closer to becoming a reality for some.  But as they contemplate which project to take on first, or which ones to do at all, the most common question that arises every time is:

“Will we get our money back on this project when we sell the house?“

Talk about the $64,000 question!    And I get asked that question all the time.  Now, there’s quite a bit more that determines the value of a house beside new granite counter tops in the kitchen, or a adding a master bedroom suite.   As we have discovered the hard way,  events like a recession, a war, a credit crisis in Europe, a shortage of inventory, and Britney Spears becoming a judge on X-Factor all seem to have more sway on the value of our homes than whether you chose to adorn your new kitchen with Miele or Sub-Zero appliances.

But the real answer to the above question, assuming that you’re going to actually live in this house and not flip it, is this:  You shouldn’t really care.   Here’s why…

Shelter First, Investment Second.

Generally speaking, any improvement that you do to a house is going to increase its value.   And the more utilitarian the improvement is, the more the value will increase.     But why shouldn’t you be so hung up on whether you’ll get every last penny out of your project when you sell the house?   Because your home is shelter first, and an investment second.

It’s only been in the past 20 years when home prices skyrocketed so much that the focus of a home shifted from away from shelter and toward investment.  I know that my parent’s generation never thought of their home as an investment.    But during the boom years when houses would seemingly appreciate by $100K overnight, that changed our focus on what purpose our homes serve.

The reality is this:  Your home is where you’ll probably spend 2/3 (or more) of your entire life…it’s the place where you’ll raise your kids, and host your most memorable gatherings.  In our society, the roof over our head is essentially the center of our well-being.   So why not make it the best place it can be?   More important, why does that decision have to come with an ROI analysis?

Look at it another way — If we used ROI as our primary decision criteria, then why would anyone ever think of buying a new car?  Nothing depreciates faster than a new car.  Yet we buy millions of them every year…  Go figure.

Within Reason.

Now this doesn’t mean you should catch the first plane over to Italy and spend $25,000 on chic marble to adorn the fireplace that you never use.  But if you’re going to get much more enjoyment out of your house by adding a bedroom, or a pool, or a master suite, then go for it.   If the stars align properly a few years down the road, you’ll probably get that money back…maybe a little more, maybe a little less.

But in the end, is that really what’s most important?
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The San Carlos Real Estate Week in Review: 4-21-12.

San Carlos Real Estate Summary.

Home buyers in San Carlos got a rare treat this past week — there were actually more new listings to hit the market than there were pending sales, by a margin of over 2:1.    That means the inventory got a badly needed boost (to the tune of +45%), and buyers now have more than a few options to look at this weekend.  While the inventory is still an an unseasonably low of 29, it’s a welcome relief from being stuck in the teens.  Let’s hope this trend continues in the coming weeks, because there are more than enough buyers to handle any surge in inventory right now.

Here are the numbers for the week:

By The Numbers.

Below is a high-level snapshot of the market performance for single-family residences in San Carlos. This data is for the week ending 4-21-2012:

>>> Click Here to Read the Full Post
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Have the blog delivered to you! Subscribe to the White Oaks Blog for free by clicking here. And while you’re at it, be sure to follow the White Oaks Blog on Facebook at https://Facebook.com/WhiteOaksBlog , and on Twitter @WhiteOaksBlog.
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San Carlos Real Estate 2012: The Q1 Report.

Off the Charts.

That’s about the best way to describe what happened to the San Carlos real estate market in the first quarter of this year.  And the “charts” below only scratch the surface in explaining how convoluted the market is from just last year.    As early as the third quarter of 2011, it became apparent that our market was entering a period of sustained growth.  The local economy was finally on the rebound, and the pending sales figures reflected this newly found confidence with the highest numbers that we had seen in 5 years.  So it was no giant leap of intelligence to predict that we’d start 2012 on a strong note.

But nobody predicted what was coming in the first quarter of this year. >>> Click Here to Read the Full Post
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