Another Reason Why There Are No Homes for Sale in San Carlos…

February 6, 2014


Is Anyone Moving?

When I purchased my home in San Carlos, I was concerned that the house itself was a bit on the small side for the future family that we were planning.   My Realtor at the time told me “Don't worry, you'll probably move to a bigger place in 5 years.  Everyone moves on average every 5-7 years”, citing statistics from the National Association of Realtors that have not changed much even to this day.

That was almost 23 years ago, and I'm still at the same San Carlos address.   So much for statistics.

But while my own example certainly bucks the long-standing national average, I got to thinking about my own clients who I have helped buy homes in San Carlos and all along the Peninsula over the past 7 years.   What percentage of them have since moved on from the homes that they purchased?   Certainly it must be significant number, if the national average says that everyone's gypsy blood starts to boil every 5-7 years.

So I dug into my database, and the results I found were quite surprising.

Staying Put.

What was the percentage of my home buyers over the past 7 years that are still in the same home?  96%.  For homes my clients purchased in San Carlos, that number is 100% – not one has moved since they purchased.    That number simply blew me away.   Do I just attract home-bodies, or is that same phenomenon happening with other agents?    One top-producing agent who has been in the business for 10 years told me he had done the same data analysis recently and 90% of his clients had not moved again during that period.   Another agent in Menlo Park tallied her number at over 80% during a 20-year period.

This seems to suggest that most homeowners on the Peninsula are generally staying put once they find a home to buy, and that's not good news for home buyers in an area where there is virtually no room for new construction.

So why is the number so high in San Carlos and along the Peninsula?   I have a few theories about that.

  1. The 15-Year Home.   Many home buyers tend to hone in on San Carlos and other Peninsula cities because of their excellent schools.   The size and characteristic of the home often takes a back seat to the location of the home and the proximity to the schools.   Whatever shortcomings there may be in the house (size and condition) can be rectified over time.    These buyers tend to think in 15-year increments — or, roughly enough time to get them through the infant years and a K-12 education.
  2. Upward Non-Mobility.   In a perfect world, a good percentage of these “15-year” buyers would simply prefer to move to a bigger home in San Carlos, as opposed to dealing with the hassle of remodeling their existing home to suit their growing family.   This transitional home-buying in itself would create many more new listings in San Carlos, right?  But as we have discussed numerous times on the site, the vast majority of move-up buyers in San Carlos are at a distinct disadvantage in this ultra-competitive market, because they usually have to sell their existing home to obtain the funds to purchase their move-up home.   Sellers simply won't consider a lengthy conditional offer when they're staring at a stack of non-contingent offers.   The net result is that many homeowners in San Carlos are going to stay at the same address, whether it's their preference or not.
  3. In versus Out.   The livelihood of the Peninsula is heavily dependent on the technology sector.  When the tech market hits an upward swing (like it's in now), tech companies tend to relocate key employees into the area, not out of it, simply because they're headquartered here and the Bay Area has always been the R&D epicenter for tech.   The lack of employees relocating out of the area creates another void of potential new listings.
  4. Working Longer.   The days of a person getting a pension at 55 and riding off into the sunset are long over.  People are living longer, and many simply have to keep working.   The train of retirees leaving town simply isn't happening.

It almost reminds me of that verse in the Eagle's hit Hotel California “You can check out anytime you like, but you can never leave.”

But until one (or more) of these trends is reversed, you can expect to continue to see uncharacteristically low levels of inventory in San Carlos and surrounding communities for the foreseeable future.

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  1. Marky on February 7, 2014 at 6:53 am

    I would also like to add two more theories:

    5. There are very few worthwhile “move-up” homes available in the first place. If you look at the stats, isn’t it true that 80% – 90% of homes are standard 3/2’s? From my observation, this is especially true in the flats. And it there was a 4/3 available, the “move-up” premium is often in the $500K – 800K range? For that price point, it is more worthwhile not moving and simply spending $400K – $600K building a new 2nd storey in an existing lot.

    6. A 3/2 in San Carlos is in the $1M – $1.2M range. Compared to other Peninsula cities that San Carlans wouldn’t mind moving to (IMHO – flat lots, nice downtowns, safe, good school districts – Palo Alto, Los Altos, Menlo Park, San Mateo, Burlingame), San Carlos is a bargain. Very few are moving out because the other more desirable (again, IMHO) cities are sometimes 50% more expensive for an equivalent 3/2 and even more for a 4/3.

  2. Scott on February 7, 2014 at 2:17 pm

    What percentage have moved on and are now just renting their old home?

  3. Chuck Gillooley on February 7, 2014 at 2:50 pm


    That’s a good question. Of my client space, none. They are all still in their homes. I can’t speak for the other agents I referred to in the article, but I have to believe that some have indeed rented their homes out.

  4. Chuck Gillooley on February 7, 2014 at 2:59 pm

    Good points. The lack of good move-up housing stock has always hampered home owners in San Carlos who need more space. There are a couple of nice 4BR homes coming on the market in the next two weeks in the flats, but it’s only 2. As you correctly stated, most of the housing stock in White Oaks and Howard Park are the 2-3 bedroom variety. With this sudden influx of cash into the area, however, more people are pumping money into expansion and upgrade projects on their own homes (the subject of my next post), which will improve the quality and the capacity of the housing stock eventually in San Carlos.

    Final point — I only wish a 3/2 in San Carlos was in the $1-1.2M range. That ship sailed about a year ago. Those same house now are $1.3-$1.5M. Yes, still cheaper than Menlo Park, Palo Alto, and the nicer parts of San Mateo — but most sticker struck home buyers would probably not see them as a bargain anymore.

    Thanks for your comments.

  5. KCaldwell on February 7, 2014 at 6:04 pm

    interesting post. It occurs to me that another reason is prop 13. I know that you can maintain your prop tax rate for a one time move within a county if you are 55+, even so prop 13 discourages moving. An interesting article here:

    A lot of folks needing larger or reconfigured space choose to renovate and/or expand their current homes rather than move. The amount of renovation and new construction occurring during the past year in my neighborhood (Devonshire Canyon) is amazing. I see much the same all over town.

  6. Chuck Gillooley on February 7, 2014 at 6:10 pm

    That’s an excellent point. One detail I didn’t mention in the original post is that we did exactly what you said — stayed put and renovated. Our tax base is much less than it would have been had we just purchased an equivalent home elsewhere in San Carlos. That makes it a huge incentive for people to simply stay put. And yes, there is a TON of remodeling going on throughout the Peninsula right now.

    Thanks for your comment.

  7. San Carlos Resident on February 11, 2014 at 4:49 pm

    I can’t believe that 2 years ago, the going rate for a 3/2 in Howard park was 800-1m, two years later its 1.3-1.5 mil. I think everyone figured out what many of us San Carlos residents have known for a long time, you cant get more bang for your buck than right here in the city of good living. We are blessed with great schools, a great downtown, great weather, and pretty safe. I am blessed that I purchased my home in Howard park for 800k less than two years ago!!! And Chuck, your right about people not moving, we are not going anywhere anytime soon. We love the neighborhood and the house. We will go up when we need to expand and turn our home into a 1.7-1.8+ million home!!! It’s not going to get better, the secret is out!!!

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