$2.5M and Beyond: Rare Air for San Carlos.

April 1, 2008

You often hear that San Carlos is an expensive place to live — but how accurate is this perception? Certainly there are many homes that sell in the $900k-$1.4M range. But what about the “high-end” homes — homes that sell for $2.5M or more? Any community that is pegged as “expensive” should have a decent selection of homes in this range, right? The answer may surprise you.

In the past 4 years, only 11 homes have sold in San Carlos for $2.5M or more.

How does this compare with other cities that are close in proximity or demographics to San Carlos? Let's take a look at Belmont, Burlingame, Emerald Hills, and Los Altos, and the corresponding factors that make communities desirable — proximity to high-paying jobs, great schools, and attractive downtown areas. Over the past 4 years, here are number of homes that sold for at least $2.5M in these cities:

  • Los Altos — 115 homes
  • Burlingame — 23 homes
  • Emerald Hills — 16 homes
  • Belmont — 3 homes

So what gives? There are three critical reasons why San Carlos doesn't have more homes in this lofty range:

  1. Small Lot Size: Much of San Carlos is made up of 4k-6k square foot parcels, which is a by-product of the post WWII settlement of the community. Note that every one of the 11 homes that sold in this range were on parcels greater than 1/3 of an acre, and all were located west of the Alameda de las Pulgas dividing line. Not one sold in White Oaks.
  2. Lack of Comparables: This the old “Catch-22” syndrome — you need other comps to help justify the high price. But without other similar homes close by, what do you do? Put another way, nobody wants to own the most expensive home in a neighborhood, especially when there's significant disparity between that home and the next highest price — you can't slam a $2M home in a neighborhood that has only sold in the $1M range. 2100 Greenwood Ave is a perfect example of what happens when you do this.
  3. Prestige Factor: For many reasons, San Carlos is a wonderful place to live for many families. It has a popular downtown, excellent elementary and middle schools, and the perfect proximity to the City or Silicon Valley. But Burlingame and Los Altos are very similar so San Carlos in these respects. So what's different about San Carlos? What's missing from the complete package? A high school. My colleague Bob Bredel astutely pointed this out in his blog post, which initiated a spirited discussion afterwards — my point is not re-invent this discussion, but to simply point out that perhaps from an “outsiders” viewpoint, this is perceived as a negative. Right or wrong, it's reality. Trust me, I'm a HUGE fan and supporter of Sequoia High School, and my kids will start attending there next year (so no hate mail please!!)

To put things in perspective, the first two points carry far more weight than the third. That's why Belmont has fewer home sales in this range than San Carlos, yet it still has its own high school. Emerald Hills has neither a downtown nor a high school, yet still has more homes in this range than San Carlos.

It simply proves the old adage that land is king…

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