Special Report: Is the Real Estate Market Softening in San Carlos?

The Over/Under (aka Red vs Green).

If you follow the San Carlos Week in Review series on this site, you know that each week I post all the homes that sold in San Carlos the previous week, along with the relationship between the sales price and the original list price.   I even color-code the difference;  if a home sells at or above its original list price, it’s highlighted in green — if it sells below list, it’s in red.   For a town where it’s almost expected that homes will sell above the list price, we have definitely grown more accustomed to seeing lots of green in the weekly update.

But have you noticed in the past few months that the report has been dominated by red ink?  I noticed it too, so I decided to do a little digging into the numbers.   I took the recent sales over the past 4 months and compared them to the sales figures for the first half of this year.   What I found was definitely an eye opener…

To compare the two periods; over the most recent 4 months, 83 single-family homes sold in all of San Carlos. In the first half of 2010 114 sold.   Care to guess what percentage of those homes that sold were able to fetch a price at or above the list price (i.e. green)?   The answer will surprise you: >>> Click Here to Read the Full Post
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It’s Kick-Off Time in San Carlos…

But Not Just for Football.

Labor Day is now behind us , and that can only mean one thing:  No, not “Yay, the kids are back in school!“…that’s a close second.  Nope, it’s kick-off time for football.  Whether you’re a fan of pro, college or high school ball, the week after Labor Day is typically the beginning of the regular season for all of them.  And that means plenty of full-blown couch potato weekends,  fantasy football drafts, and neglected yard work.

But this week also marks the kick-off of the fall real estate “season” in San Carlos.  Yes, there is a fall season in real estate, believe it or not.  Obviously, everyone knows about the spring buying season in real estate, but what happens from the end of the summer through the end of the year is not well understood by many buyers and sellers.   Make no mistake; even though it’s not as big as its spring counterpart, there is a significant and well-defined real estate market in the fall.

The Fall Real Estate Market.

In a normal year, the big buying season in San Carlos winds down in late-July and August.  But once that August snooze is over, there’s a big uptick in activity and sales during those two and a half months that span between Labor Day and Thanksgiving.     But it’s much easier to see it than to describe it — take a look at what happened last year:

Granted, last year was anything but typical, but the performance of the market relative to the other quarters was consistent.   If you pay attention to the red line that designates pending sales, it clearly illustrates the whole point of this discussion.   There is a significant, albeit short-lived, real estate market in the fall.  And I have no doubt that this phenomenon will happen again this year, because the same elements are in play right now that have driven the market all year long:

1. Low Interest Rates
2. Demand (far more buyers than sellers.)
3. Schools.

It’s important to understand what the next 2.5 month span has in store for those who are in the market.

What Does This Mean?

For starters, sellers should not be hesitant to list a home in this market.  Now that summer is over, you once again have the full attention of the buyer pool — but that will only last until about Thanksgiving.   There has been a relentless buying spree in San Carlos, especially in White Oaks and Howard Park, and it’s showing no signs of slowing down in the near term.

For buyers, it’s very easy to get lulled into inactivity during the late summer months.  But now, it’s critically important to keep on your toes, since you should start seeing a surge in new listings over the next few weeks as these smart buyers get there homes on the market and try to capitalize on the fall market.  The same rules apply as they did in the spring — get into see the homes as soon as possible, and be ready to make a move quickly.

The bottom line is that the lull of August is over — and we’re jumping right back into “business as usual” in the San Carlos real estate market.  So stay tuned for the “post-game” show after this season is over to see if my prediction was correct.
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Home Prices on the Rise in San Carlos.

Home Prices Climbing from 2009 Levels.

Ask anyone who has been shopping for a home in San Carlos over the past few months, and they’ll tell you they’re getting a sinking feeling that home prices are climbing right before their eyes.   Their gut-feel certainly seems to be well-founded.  It seems that prices on nicely remodeled 3BR/2BA homes – the bread and butter of much of White Oaks and Howard Park –  that were selling in the mid $800′s – low $900′s just last year are now routinely selling over $950,000.

It turns out there is legitimacy behind this perception.  We’ll take a look at two common metrics — Average Sales Price and Average Price/Square Foot — to see what’s actually happening in San Carlos so far this year.

Average Sales Price.

The graph below shows both the average sold price as well as the average list price for all homes in San Carlos over the past 15 months:
>>> Click Here to Read the Full Post
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White Oaks Housing Market Flexes Its Muscle

Let There Be No Doubt…

If there were any remaining doubts about the strength of the housing market in the White Oaks neighborhood of San Carlos, they were resoundingly crushed this past week.   While it has been well documented on this site that the market for homes below the $1M mark has remained strong, even through the depths of the recent recession, we’ve had very few sales lately to test the higher price range of homes.    Indeed, the sub-$1M market accounted for a whopping 79% of all homes sold in White Oaks over the past year.

So it was certainly understandable that eyebrows were raised when not one, but two homes above the $1.8M mark came on the market in White Oaks within a week of each other:  David Young’s listing at 2033 White Oak Way at $1,850,000, and Mike and Sandy Rostad’s listing at 1340 Orange Avenue for $1,950,000.   What kind of reception would these homes get in this economy, especially when there hasn’t been a single home to sell for over $1.5M in  White Oaks for over a year?  Would they sell quickly, or would they languish on the market?

It didn’t take long to get our answer.

Sold…

1340 Orange Avenue, San Carlos

2033 White Oak Way was the first to go when it sold in 5 days with multiple offers.  1340 Orange Avenue quickly followed suit, selling in only 7 days, also with multiple offers.   The final sales prices of both of these will be posted on the blog as soon as they close escrow.  But based on the intense interest in both homes, I wouldn’t be at all surprised if at least one of them cracks the $2M mark.

Not to be outdone, the listing at 1526 Chestnut Street sold in just 8 days with as many as 7 offers.    Listed at $1,029,000, one could argue that it was a bit under-priced at $480/sq foot.   But 7 offers?   Wow…

That’s not just market strength — that’s a market on steroids.

A Strong Spring.

If there’s a lesson to be learned, it’s that there are very few “bargains” to be had in White Oaks right now.  While we’re not in the frenzy of 2005 where virtually everything sold, it’s clear that buyers today are having no qualms about pulling the trigger for clean homes on desirable streets.   Consequently, these homes are consistently drawing multiple offers and driving the prices up.   So don’t get lulled into the misguided perception that it’s a buyer’s market right now, regardless of the condition of the economy.   If you want to call White Oaks home, trust that you have lots of company right now.
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San Carlos Real Estate Report Card: First Quarter of 2010

Are Things Looking Up?

Back in January of this year,  I posed the following question in a my annual preview podcast:  Will 2010 Be a Better Year for San Carlos Real Estate? In that podcast, I stuck my neck out and predicted that yes, we will see an increase in San Carlos home sales in 2010, thus ending two years of consecutive declines.  The main reason behind this prediction was simply that the market conditions heading into the first quarter of 2010 were far different than they were during the same period a year ago — more credit available, better interest rates, and higher demand.  I also cautioned that lack of inventory and the high unemployment rate could curtail any growth.

So now that the first quarter of 2010 is in the books, how is my prediction turning out?

Q1 Comparison.

There’s a ton of information in the graph below.   Not only are the number of sales tracked by month, but also the number of pending sales, and the general inventory situation: >>> Click Here to Read the Full Post
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Double-Dip Recession? It’s Why Some Buyers Are Still on the Sidelines…

Waiting out the Market.

Bottom of the market? Economic recovery? That’s not how a growing number of potential home buyers are assessing the current real estate market right now. Despite many indicators that have pointed toward a gradual recovery in 2010, there’s a contrary view that’s starting to gain some footing, and it’s making these buyers and real estate investors nervous: Double-Dip Recession.

What is a Double-Dip Recession?

Investopedia defines a double-dip recession as follows:

“When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.”

While nobody is standing up and saying that we’re heading back into a recession, the news this past week certainly raised questions about the validity of our current “recovery”, as this article from CNBC discusses: Double-Dip Recession Fears Creep Back into the Market. For some home buyers, this specter is enough to keep them on the sidelines, even despite record-low interest rates. Here’s why… >>> Click Here to Read the Full Post
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(Almost) Nothing for Sale in the Flat-Lands of San Carlos…

It’s no secret that the San Carlos real estate market is being effectively strangled by the lack of inventory right now.  There are simply way more buyers looking in San Carlos than there are available homes for sale, and this continuing disparity is frustrating for these buyers who have checkbooks in hand, loan pre-approval in their pockets, and ready to buy just about anything that comes on the market.

At the time of this post, there are only 24 single family homes for sale in all of San Carlos;  but that’s only part of the story.   Of those 24 homes for sale, only 3 of these listings (or 1.8%) reside in the three Realtor zones that we generally refer to as the flat-lands of San Carlos!  There are two listings in Howard Park, one listing in White Oaks, and no listings in Clearfield park.   See the map below for a rough outline of this area:

The Flats

View San Carlos Flatlands in a larger map

The part of San Carlos the resides in the “flats” is high on the priority list for many buyers who are looking to make San Carlos their new home.  The proximity to downtown and the desire to have a flat yard are the primary reasons, and living within the White Oaks School boundaries also remains a big draw to that particular neighborhood.

But for now, buyers are forced to be patient and wait for something to come on the market.  They also know that when a well priced home in good condition comes up in this area, competition will be fierce just as it was at the end of 2009.  Multiple offers won’t be going away anytime soon, especially if this imbalance remains.
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High Demand, Low Inventory Kick Off the New Year in San Carlos.

What a difference a year makes.

If you were to take a snapshot real estate market in San Carlos at this time in January 2009 and compare it to right now, you wouldn’t believe you were talking about the same month.    One year ago, we came out of the holidays in a serious funk.   After witnessing a precipitous drop in the stock market and the utter collapse of the credit market, buyers were in no mood to buy homes.  Open houses were sparsely attended, and buyer activity was virtually nonexistent.

And it showed in the numbers, too.   In January of 2009, the inventory of homes for sale in San Carlos swelled to 71!  But when you look at the number of homes that closed escrow in January ’09 (5) and  February ’09 (11), it’s evident that not many of these 71 homes found new buyers.   As I discussed in a recent podcast, it wasn’t until April-May of 2009 that the real estate market in San Carlos finally found its footing.

A different kind of January.

Fast forward to today, and it’s a night-and-day difference.    There are currently only 26 listings in all of San Carlos, and buyers are flocking to open houses in droves — regardless of the price range.  >>> Click Here to Read the Full Post
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