Any time you have a market run up as fast as the San Carlos real estate market has in the past few months, there are going to be some casualties in the buyer ranks. This recent market swing is no different in that respect. In the past couple of weeks, I have had two different buyers tell me that they’re “throwing in the towel” and pulling out of the market to wait for a more favorable conditions before they will consider buying a home on the Peninsula. I’ve had several other agents share similar stories, too.
The sentiment that seems to emanate from all of these now-former buyers is that the market has simply passed them by. While they were patiently waiting for right house to come up in this inventory-depleted market, prices just rocketed out of their range. After all, the price you would have paid 6 months ago for a 3-bedroom house in San Carlos will only get you a nice 2-bedroom one now. And that’s if you can even find it in the first place. That kind of compromise simply doesn’t work for many buyers.
The Numbers are Numbing.
There’s one certainty in a market like this: Just when you think you’ve seen it all, something else comes along and knocks your frame of reference completely out of whack again. Just two weeks ago, we were stunned by the shockwaves of the $1.3M sale on the 3-bedroom home on Chestnut Street. It was very difficult to wrap our heads around a 3BR home pulling down $1.3M. Fast forward to today, and there were two 3BR sales on Orange Avenue that make the Chestnut sale seem like old news. 999 Orange Avenue ( at $1,378,000), and 1124 Orange Avenue ($1,360,000) both raised the distinct possibility that the $1.3M mark was not just an anomaly, but may indeed have become the barrier to entry for a decent sized 3-bedroom homes in San Carlos. That’s pretty mind-numbing. At least for this week, it is. Who knows what next week will bring.
This reality has sent many first-time home buyers reeling. Compared to places like Menlo Park and Palo Alto, San Carlos has always been considered a relative bargain. But many of the things that make those other cities attractive also exist in San Carlos – location, schools, downtown, etc.. So we’re starting to see buyers who pulled the rip-cord from these escalating markets parachuting into San Carlos.
It’s probably not a coincidence that in both Orange Avenue transactions above, the buyer’s agents were from Palo Alto.
Play or Sit?
For every buyer that has made the decision to sit this market out, I can guarantee you that many more are thinking about it. There are several key questions that they have to consider — Will the market continue on a tear like this, or will it eventually settle down? When it does settle, where and when will it be? And finally, is there a risk that pulling out of the market now means they’re out of the market for good?
I certainly don’t have a crystal ball, but based on the conditions of the economy and the San Carlos real estate market, combined with the recent behavior of buyers, there’s nothing to indicate that this freight train is going to lose steam any time soon.
After all we’re probably only a week or so away from yet another sale that will make the Orange Avenue shockers seem like old news.
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