What is Behind the Inventory Surge in San Carlos?
May 31, 2016
A Spike in New Listings.
Does it seem like there have been more homes on the market recently in San Carlos than what you've been accustomed to seeing? Do inventory levels seem to be sitting at higher levels than you recall in recent years?
It's not your imagination. There has been an interesting swing in the San Carlos real estate market over the past 60 days that has had a profound effect on the local real estate market, from inventory levels all the way to the mindset of the buyers who are in the market for these homes.
As I have written about numerous times in the past on this site, the San Carlos residential real estate market has been suffering from a trend of declining listings for the past 3 years straight. If you read this blog on a normal basis, you're familiar with this chart:
What this chart shows you is that San Carlos has been in a significant downward trend for single family home listings since all the way back in 2011, when we were emerging from the recession and there were nearly 400 homes listed for sale. The 256 listings that we saw in San Carlos in 2015 not only represented the lowest number in all history recorded in the MLS, but was also a stunning 34% drop in just 4 short years. It's one of many reasons why home prices have seen stratospheric growth over the last half decade.
As we headed into 2016, the downward trend continued. For the three months of this, new listings were tracking even lower than the record low that we saw only the year before, which seemed to be an impossibility (see below).
But then something started to noticeably change about 60 days ago.
This chart shows the new listings by month through the end of may for both 2015 and 2016. At the end of March 2016, we were sitting at a total of 57 new listing year to date — which represented a drop of 16.2% from the record low registered in 2015. By all indications, we were clearly headed for another listing drought.
But in April, things began to change quite rapidly.
If you sensed that there were suddenly a huge uptick in new listings in San Carlos in the last couple of months, you were correct. Starting in April, we saw a huge and immediate surge in new listings that has continued right through the end of May.
In just the last 60 days, 78 new single family residence listings hit the market in San Carlos, or basically more than one new listing every day. To put that number into perspective, it's 37% more than the first 90 days of the year combined. It also drove the rate of new listings from being 16% below the prior year, to 10% higher — all in just two months.
The Market Reaction.
The effect of this sudden surge was noticeable on a number of fronts. The most obvious was inventory levels. A market that could barely sustain inventory levels in the low teens was suddenly sitting at 20 or more listings for weeks on end, with a peak of 29 registered just last week. We are sitting at 23 today. While these figures are more in line with a normal Spring real estate levels, it has been a long time since the local market has had this many homes to digest.
The other noticeable factor has been the change in psyche of the home buyers who are in this market right now. Whether its because there are simply more homes to choose from, or perhaps the belief that a flood of new inventory will be coming, there is a palpable reduction in the sense of urgency with buyers lately.
It's distinctly measurable in the drop in the number of offers that each sale is getting across the board. Hot homes that would have fetched 8-10 offers just 6 months ago are getting half as many… or maybe only one. And some homes are simply sitting without offers at all — and these are quality homes that would have had no problem selling just a few months ago.
But it's also noticeable in comments that I hear from buyers at open houses. They simply don't feel as “under the gun” as they did last year, and consequently they are circling the market with much more deliberation — perhaps seeing if this trend will continue in their favor.
Behind the Numbers.
The big question that needs to be answered is this — why are there suddenly so many new listings? There is an undeniable sense that some sellers simply believe the market is reaching the top, and those that have had their finger on the trigger for the past two years are pulling it. Over half of the listings I will market this year will be buyers who are moving completely out of the area, not just across town.
Some residents are also fed up with some of the side-effects of a booming local economy; unmanageable traffic, increasing cost of living, and the unavoidable change in the “look and feel” of the San Carlos that they were fond of (more on that last topic later this week), and have decided to pull up root and find a more relaxed pace of life elsewhere.
But whatever the reasons may be, home buyers have been enjoying market conditions for the past two months that they have not seen since the Recession.
Whether that's a temporary blip or a longer term trend remains to be seen.