Downsizing in San Carlos

Going the Other Direction.

A few weeks ago, we talked about the challenges facing the “move-up” buyers in San Carlos — those people who already own a home in San Carlos but want to move up to something bigger and still stay in town.  In a market that so strongly favors sellers right now,  finding (and being able to purchase) their replacement home is the biggest challenge this group faces, because selling their current home in this market would be no problem whatsoever.

What’s interesting is that there is a smaller but still very important group of potential home sellers in San Carlos that’s trying to do the exact opposite of the move-up buyer.  These are the homeowners who suddenly find themselves in a much larger home than they need, or can afford, to live in — yet they still want to call San Carlos home.  Most often they are the empty-nesters who no longer need that 4 or 5 bedroom home since they kids have all flown the coop.    They comprise a smaller group called the “down-sizers“, and they are no less important in this market than the move-up buyers.

Similar Challenges.

Much like the move-up buyer, the typical downsizer will have no problem selling their current home.  The big challenge is finding a suitable smaller home in San Carlos.  And with a whopping 11 homes for sale in the entire City right now, there’s simply not a lot of options for either group.    Nobody wants to run the risk of having to live in transitional housing after their home sells.  Moving is already a huge pain in the rear, so doing it twice is not high on most people’s list.

The sellers in both groups who have enough equity in their home, or who are in a strong enough financial position to not have to sell their current home before they buy the replacement home, are at a distinct advantage over those who don’t.  But in either case, nobody is willing to put their home on the market until they’ve identified where they’re going next.  It’s a significant contributing factor why the inventory of homes for sale is so low in San Carlos right now.

A Hidden Inventory.

When you start to take stock of the number of homes on both sides of this fence, it’s a pretty significant number.   I have no fewer than four different move-up buyers in various locations in San Carlos with different degrees of home sizes and bedroom counts, and I know that many other agents have the same situation.   On the flip side, there’s likely a smaller number of downsizers who would be a perfect fit for one of these beautiful homes.

But since neither side is willing to put their homes on the market,  it has created a pool of “hidden” inventory that could be made available if only there was a way solve both problems at the same time — almost like connecting the dots between these specific buyers and sellers.

Are you one of those downsizers who can’t seem to find the right place in San Carlos to call your next home?  If so, contact me — there may be a creative and mutually beneficial solution right under our collective noses.
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The San Carlos Real Estate Week in Review: 3-30-13.

San Carlos Real Estate Summary.

I overheard a conversation this week between two agents that the market might actually be slowing down in San Carlos (no, this is not an April Fool’s joke).   I’m not quite sure where that perception came from — maybe it’s the fact that some of the recent sales were “only” getting 4-6 offers, instead of the lofty double-digit offer counts of some previous sales.  But if you want an indication of the temperature of this market this past week, just look at the Pending Sales section below.   Eight homes went pending last week — seven of those eight were gone in under two weeks.  One never had an open house.

It’s not slowing down, folks.  You heard it here first.

Here are the numbers from last 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 3-30-2013:

>>> Click Here to Read the Full Post
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Warning: (Another) Rental Scam Hits San Carlos.

On Trulia This Time.

If things weren’t already bad enough in the San Carlos rental market –  with even more people competing for fewer rental homes, and rapidly escalating rental prices — now renters have to contend once again with slime-bag scammers who are trying to prey on the desperation that permeates the local rental market.  I wrote about this topic a couple of years ago, when it was happening with regular frequency on Craigslist.

Well, it’s back again.  This time, however, the scammers are using the rental section on the popular website Trulia to swindle unsuspecting renters out of a few thousand bucks.  So it’s very important to be aware of what’s going on out there.

Same Scam, More Sophisticated.

Just like the Craiglist scam that has been running for a few years, this current illicit activity comes in the form of a seemingly legitimate rental posting in the rental section of Trulia’s website.     These posts advertise homes for rent in San Carlos, complete with an accurate description of the home,  nice photos, and usually a very attractive rental price.    The problem is that the homes they’re advertising for rent are not really for rent — they’re homes that have been recently listed for sale on the MLS.  They simply steal the photos and the property description from the MLS (or any of third-party real estate sites that subscribe to the MLS feed) and create a completely false rental posting.

The hook here is the abnormally low rental prices that they are asking for these — usually about 50% off the going rate.  The scammers claim to be the homeowners who are out of town for an extended period of time and are looking to rent the home while they’re gone.   Because they’re out of town, they want to handle every aspect of the rental remotely, including sending the deposit check and any advance rental money to somewhere else in the country before they’ll give you the keys to the place.

Well, you can see how this ends.   The eager renters send their money in, the keys never show up, and when they drive to the property to investigate, they’re met by a befuddled homeowner who informs them that the house is not, and never will be for rent.

What makes this version of the scam even more dangerous is the level of sophistication.   Because access to public records is so easy on the internet nowadays, thieves are actually looking to see who the current owner is and then creating a fictitious email address with that name (which is really creepy).   So when renters start to check on the legitimacy of the post, the basic stuff seems to check out.  The more info that can be obtained online, the more they can make the posting look legit.

If It Looks To Good to be True…

Unfortunately, the only safeguard you have in these situations is your own common sense.  It’s very hard to track down these types of criminals, simply because it’s relatively easy to hide within the massive maze of the internet.  But there are a few telltale signs that a rental posting may be a scam — here are a few of the obvious ones:

• Below Market Rent.  In one of the recent cases, they had listed an 1,800 square foot home for rent in a great San Carlos neighborhood for $1,700/mo.   If you’ve been even remotely connected to the rental market, you know that’s less than half of what that home would fetch in this market.
• Missing Owners.  In the recent Trulia cases, the supposed owners claimed to be in Atlanta visiting their 18-year old daughter for an extended period of time.  They were not able to show the property to anyone.   It’s usually some sob stot
• Rent Sight Unseen.    When they ask you to mail in a check to get the keys, and you haven’t been able to see the place yet, this should be a major red flag.

The bottom line is that if normal rules of engagement for a rental aren’t being followed, you should definitely proceed with caution.

**As a footnote — Trulia did ultimately take steps to remove the posts and block this particular user, once the scam was brought to their attention.  But it took about 5 days after they were notified, and during that time about a dozen potential renters stopped by these two homes trying to look around the property and gain access.  Not a good thing.

It’s also worth noting that these types of scams can happen anywhere — Craiglist and Trulia were the two most noteworthy recent cases because they are so widely read.   Generally, the vast majority of rental listings on these two sites are totally legitimate, and this post should not be construed to imply that they’re not.

It’s simply a heads-up to be able to recognize those few postings that are not legit.
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The San Carlos Real Estate Week in Review: 3-23-13.

San Carlos Real Estate Summary.

Nothing seemed to slow the runaway freight train that is the San Carlos real estate market this past week.   9 homes went into contract during the week, with some at some eye-popping prices.  You’ll be amazed to see the prices on both 199 Sycamore Street an 124 Chestnut Street when their final prices are posted.   But that will only remain a shocker until the next barrier is destroyed — In fact, the theme for San Carlos market should be “Last Week’s Insane is This Week’s Mundane.”   It was only a few weeks ago when we marveled at 148 Chestnut shattering the $1.3M mark for a 3BR home — now it’s looking like a bargain this week.

Here are the numbers from last 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 3-23-2013:

>>> Click Here to Read the Full Post
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Lower Aim, Higher Hopes.

Inverted Mindset for Buyers.

There’s an interesting shift taking place today in the minds of realistic home buyers who are shopping in this heated real estate market.    Back when the market was much more balanced (um, 199….?),  if a buyer said that the absolute cap on their budget was $1,000,000, it made sense to set their search criteria a little bit higher, and for them to look at houses up to $1,050,000 — or about 5% above their budget cap.  Why?

Two reasons — first, back when homes weren’t flying off the market at a double-digit increases over list price, you could actually negotiate the price of the home with the seller.  Go figure!   So that $1,050,000 house could quite possibly be had for $1M, especially if it had been on the market for a few weeks.     The second reason is that rarely is there ever an “absolute” cap to a buyer’s budget. More often than not, if a buyer finds a home that they absolutely love but is about 5% (or less) above their stated cap, they almost always miraculously find a way to come up with the extra scratch to make it happen.  And they’re thrilled to do so, because they got the house they really wanted.

Not so in today’s market.

Aim Low.

Anyone watching today’s market closely knows that just about everything is fetching at least 5% over asking price, sometimes much more.  Taking last week in San Carlos as an example, of the 9 single-family homes that closed escrow, a full 2/3 of them sold in a range of 6%-23% over the list price.   And these  were for contracts that were locked up 30 days ago.  As the market gets hotter, those numbers are continuing to rise with the temperature.

This phenomenon is forcing buyers to lower the aim of the house they’re looking for.  Instead of looking 5% above their budget cap, they’re now looking 5% (or more) below their cap.  In other words, those very same $1,000,000 buyers are discounting the chances of getting anything listed over $950,000 because the probability is very high that it will get bid well beyond their limit.

It’s a delicate balancing act.  On one hand, you don’t want to risk not bidding on a house only to find that it didn’t get bid into the stratosphere like you thought it would.    On the other hand,  it’s emotionally draining to keep writing offers on homes that you have no chance in getting.   That’s a big reason why you see some buyers sitting out this market now.    They’re just wiped out.   But it doesn’t need to be that way.

Know Thy Market.

It’s a theme that I constantly preach on this site.  Knowing the local market (and working with an agent who knows the local market) can help you make informed decisions on when to strike, and when to save your bullets for a different battle.    I’ll be the first to admit that pricing a home for sale is an inexact science.  It involves just as much looking at historical datapoints  as it does gazing into a crystal ball.   Despite the best efforts,  it just doesn’t always come out right.  And when you mix in those intentionally under-priced listings, it makes it really difficult for a buyer to differentiate a real buying opportunity from just a pipe dream.

Intimate market knowledge is like the sense of smell for a bloodhound.  It enables you to intelligently sniff your way through what is a very tricky and treacherous market for buyers right now.   And the more you know about the market, the better you can predict where the chips are going to fall.
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There’s a Lot of Cash in the San Carlos Real Estate Market.

But Not Everything is All-Cash.

There are a lot of crazy stories emanating from this crazy San Carlos real estate market these days,  where skyrocketing prices and the huge sums of money being thrown around to win hotly contested multiple offers have seem to become the norm.  One perception that I keep hearing is that all of the homes that have been selling lately have been to all-cash buyers.  This is simply not true.    While there certainly have been a few high-profile all-cash transactions in San Carlos this year, I can confidently tell you that these types of transactions still only make up a small minority of all of the home sales.

This doesn‘t mean, however, that there’s not a ton of cash being wielded by the buying pool in today’s market.  And it’s important to know what this means to you as a buyer or seller of real estate in this market.

Strong Cash Positions.

What’s far more common to see in this market are offers that are heavily cash-laden and accompanied by a relatively small, conforming loan.   These are offers where the down payment makes up 40% to 70% (or more) of the purchase price.    For a $1.3M purchase, you’re talking about $520,000-$910,000 in cash.   I know that the numbers have become a bit numbing lately, but that’s still a LOT of money!

There are two reasons why a strong cash position can make your offer more favorable.  First, it conveys buying strength to the seller.   When an offer comes in with the minimum 20% down payment, it’s easy for the seller to assume that the buyer is stretching themselves, perhaps uncomfortably, to by their house.  That means that there’s a higher probability that the seller may have to pull the plug on the contract a few weeks down the road.  That’s simply not the case with half a million in cash.

Second, it makes it easier for the buyers to make their offer more attractive by waiving any finance contingency.   That’s definitely a much riskier proposition for the 80/20 buyer, especially considering these inflated prices.

An interesting sidelight to this whole discussion is that there are also buyers who easily have the cash to purchase a home, but they’re still opting to borrow money — why?  Because interest rates are so low it’s almost like free capital, and the return that they can get investing their cash is often times far greater than what they’re paying in interest on their loan.  So why not take advantage of it?

Where is it Coming From?

This question was actually posed by a blog reader a few weeks ago.  Actually, it comes from a variety of sources:  Equity from a previous home sale, proceeds from an IPO, rewards of a strong stock market, and even the old tried-and-true “parental assistance”.    Interestingly enough, where it’s not coming from (at least not yet) is Facebook.  That IPO seems to have a had a much more profound effect on the San Francisco real estate market than it has here in San Carlos.   Let’s face it, if you’re young, single, and insanely rich, San Carlos isn’t where you’re going scratch that itch.

But San Carlos sits smack in the middle of one of the largest economic engines in the world.  We’re literally right in between the tech and biotech industries, both of which are seeing amazing growth again.  Incredible amounts of wealth are being generated every day here, and the economy isn’t even back in full swing yet.  Just wait until that happens.

So where the money comes from is not as important as accepting that it’s definitely there, and that you’re going to be dealing with that fact one way or the other if you’re in the housing market in San Carlos.    If you’re a buyer, the amount of cash you can bring to the table makes a huge difference on your chances of success.  As a seller, the less a bank needs to be involved in the purchase of your home, the less risky the deal is for you.

The old saying “Cash is King” still rings true today.
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The San Carlos Real Estate Week in Review: 3-16-13.

San Carlos Real Estate Summary.

If you take good look at the section below titled “Single-Family Homes Sold in San Carlos”, you’ll see the kind of hard evidence that has defined the upswing in homes prices that we’ve experienced in San Carlos so far in 2013.  The 9 homes that closed escrow this week sold at a price that averaged 8% above the asking price, with one of them fetching a whopping 26% over list.  That’s a perfect snap shot of the housing market that we’re living in right now.

There was a solid showing this past week for new listings, with 7 homes making their debut on the market. But with nearly the same number going into contract, the inventory of homes for sale still sits at a paltry 13 at the time of this post.

Here are the numbers from last 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 3-16-2013:

>>> Click Here to Read the Full Post
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Are you ready to step up to the most comprehensive data available about the San Carlos Real Estate market? Then subscribe to the White Oaks Blog for free by clicking here. Be sure to follow the White Oaks Blog on Facebook at https://Facebook.com/WhiteOaksBlog , and on Twitter @WhiteOaksBlog.
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A Friday Thought: Cleaning Up San Carlos.

Bans on Bad Things.

Perhaps you’re already aware of this, but a few weeks ago the City Council of San Carlos voted 4-1 to adopt a ban on carry-out plastic bags, citing environmental concerns.   The ban will take effect on July 1 of this year.  Bonnie Eslinger of the Daily News did a great job covering the details of the council meeting and the subsequent vote, so I won’t rehash them in this post.  You can check out her article here.

Whether or not you believe that those evil plastic bags are indeed the scourge of the earth is probably a personal opinion, but I understand the Council’s intention of at least trying to do right by the environment.  After all, there’s no arguing that these bags take about a trillion years to break down in our landfill — the only two things that take longer to decompose are McDonald’s Cheeseburgers, and….

Cigarette Butts.

Hmmm…  OK, now that the 800 pound gorilla has been let out of his cage, let’s at least acknowledge his presence.    As I walk around downtown San Carlos, I see way more crushed cigarette butts on the sidewalks and in the gutter than I do those aforementioned evil plastic bags.    Maybe because the bags have the gift of flight is the reason we don’t see more?   But if we’re on the topic of monitoring what goes down our storm drains to the pristine waters of the San Francisco Bay (ahem),   one would think that there are far more butts than bags in the bay right now.

Banning smoking downtown is probably not the answer.  I don’t smoke, but that doesn’t mean others shouldn’t have the right to do what they want to their bodies.   We live in a free country.  That’s not the point.

But as I drove down Laurel Street yesterday and watched the driver in front of me fire a lit cigarette out the window, it dawned on me that I’d just like to see a more concerted effort by our smoking population, and perhaps the city, to find a way to fix a problem that we’ve ignored for too long.

Especially if we’re truly concerned about cleaning things up in City of Good Living.   Just a thought…
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