The “Other” X-Factor.
The fact that homes are selling for stratospheric amounts in San Carlos should no longer be a shock to anyone who watches the local real estate market. We are in the midst of one of the most dramatic run-ups in home prices in recent history, so after nearly 6 months of constantly shattering price records, we’ve almost become desensitized to the lofty premiums that homes have been fetching this year. One week’s insane becomes the next week’s mundane.
In a market where there is an abundance of well-heeled buyers, there are certain homes that one would naturally expect to see the price driven up to uncharted territory. The homes at 124 Normandy Court ($2.85M), 2235 Carmelita Drive ($2.272M), 437 Hillcrest Road ($2.5M), and 156 Normandy Court ($2.15M) — just to name a few — all had one or more of the “X-Factors” that you would expect buyers to break the bank over. All of these homes were either brand new construction, recently remodeled, were in a top-10 location, or had one-in-a-million views (or some combination of these.) In this market, it was kind of expected that buyers would go crazy over these homes.
But there have been many other homes that have sold in San Carlos this year that have fetched equally dramatic prices and premiums over the asking price where there was no immediately obvious X-Factor like the ones above. You’ve undoubtedly seen a few of these this year where the sales price has left you scratching your head.
So I pulled the data on all homes that have sold in San Carlos so far in 2014, and then ranked them by the highest premium that was paid over the asking price (the absolute dollar amount, not the percentage). What I found was quite surprising — the homes below occupied nearly 50% of the top 20 slots on this list (click on any of the addresses for the full description and pics.)
||Lot Size (sq ft)
|917 Rosewood Avenue
|209 Rockridge Road
|1415 Elm Street
|2089 Eaton Avenue
|1005 Rosewood Avenue
|41 Walton Street
|878 Knoll Drive
|1924 Belle Avenue
If you are familiar with any of these homes, you’ll know that they were not brimming with the structural attributes that helped push the 4 homes at the top of the list to their lofty heights. Most of the homes in this list were in very original condition; some had very challenging layouts; one was only a 2BR home.
So how is it that these homes made the list of the highest sought after (and paid) homes in San Carlos? Just look at the right column. They have the one X-Factor that many buyers today in San Carlos have put at the top of their list, forsaking all other attributes – usable land.
The New San Carlos Buyer.
I get asked quite often what the profile of the typical buyer is in San Carlos is today. At the risk of generalizing, the vast majority of buyers who are zeroing in on San Carlos today are young professionals that either have young children, have a child on the way, or they’re practicing for that eventuality. This is no surprise — these young families yield tremendous buying power, and the schools, the downtown, the mid-peninsula location, and community feel of San Carlos make it a perfect match for what they are looking for.
What’s evident about this group of buyers is that they’ve placed the size, location, and usability of the lot far ahead of any of the attributes of home itself. How else can you explain that fixer-uppers in White Oaks and Howard Park are fetching nearly $1,000/sq foot? Or that these buyers are passing on stunningly remodeled homes that they can afford? It’s the land. Buyers want a flat, usable back yard where the kids can play, and that they can entertain friends. The structure itself almost becomes an afterthought.
But this is a logical thought process. You can always make more house, but you can’t make more land (unless, of course, you’re the CEO of Facebook and you can simply buy out your neighbors.) That was actually my thought process when I bought my San Carlos home nearly 23 years ago. I was WAY more focused on the lot characteristics than I was the actual house, and we ended up holding out for a small house that was situated on an 8,800 square foot flat lot, knowing that we could change house down the road. And now that the rules have been somewhat relaxed on lot coverage in San Carlos, you don’t need an abnormally large yard to build a nice 4BR home — and still have plenty of land left for the back yard.
Land is Gold.
The bottom line is that if you’ve got a large, flat piece of property in the flats of San Carlos, you’re probably sitting on more value than you think you are. Many of today’s buyers in San Carlos are simply strong enough to pay a premium for the neighborhood that they want — regardless of the condition of the house — and still have enough left over to build their dream 15-year home.
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