If you ever needed a real-life example of the basic economic concept of supply and demand, then you need to look no further than the San Carlos real estate market in 2013, because it literally took a page out of the econ textbooks. 2013 was a phenomenal year for home valuations in San Carlos on every conceivable metric, as the market rode a rapidly rebounding economy and job market in the Bay Area. Add to this mix an endless supply of nearly free money, and you’ve just created a demand for housing that we haven’t seen in almost a decade.
The inherent limitation of San Carlos (and every other community on the Peninsula) is that there is will always be a finite and predictable housing stock because of the fact that the Peninsula is land-locked. Unlike the east bay or south bays where new expansion is possible, the total number of single-family homes in Peninsula communities has only seen an infinitesimal increase over the past decades. So no matter how many people suddenly want to move into the City of Good Living, there will only ever be a fairly predictable number of homes for sale during any given year.
To exacerbate this problem, the number of single-family homes that were listed for sale in San Carlos on the MLS actually dropped in 2013 from previous years, which created the perfect storm for home sellers: If you couple high demand with low inventory, prices will increase.
And boy, did they ever. Let’s take a look at the numbers.
Going Up, Up, Up.
You’ve seen the following chart numerous times in the many price analyses that I do on the blog. Average sales price is the most commonly used metric to gauge the growth of any housing market, and is a good starting place to show the dramatic growth in house prices in San Carlos. >>> Click Here to Read the Full Post
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