San Carlos: Q3 Check-In on the Real Estate Market.

A Leveling Market.

There has been much talk recently about the direction the Bay Area housing market is heading, with some widely discussed articles citing a precipitous drop in home prices, and the overall number of home sales.  Certainly, we've seen some of that effect playing out in a handful of communities along the Peninsula in the second half of this year.

Now that the third quarter of 2019 is in the books, it's a good time to check in on how the San Carlos real estate market is faring in the face of what appears to be a cooling economy.  In the stats below, we'll take a look at some of the key indicators that we use to gauge the health and activity in the local market, including average sales price, price per square foot, and days on the market.

Bucking the Trend?

There are indeed a few communities that are feeling the pinch of a leveling economy.  The average price of a single-family home in Palo Alto so far this year has dropped a surprising 7.2% since last year, and is even marginally lower than 2017 (price per square foot data mirrors this very closely.)  Menlo Park is feeling some pain as well, although not as severe as Palo Alto. The average price of a single-family home in Menlo Park has dropped by about 2.5% from last year, but it remains comfortably above 2017's figures.

Is San Carlos feeling the same pinch?  The answer is yes and no.  On one hand, our market is outperforming last year's figures, unlike Palo Alto and Menlo Park.  But the growth rate is now at the lowest amount we've seen since the end of the great Recession, adding some credibility to the assertion that the market may be leveling off.   Let's look at some of the data below:

So far in 2019, the average price of a single-family home in San Carlos is up only 2.8% from the previous year.  This is easily the smallest year-over-year increase that we've experienced since the Recession, and thankfully at least it's not on the decline like we're seeing with our neighbors to the south. The average price per square foot is essentially flat to 2018, which is also the first time we've seen such a leveling in the statistics. (A quick note — Even though we are comparing 3/4 of 2019 to all of 2018, this data won't differ much over the next 3 months, since we're heading into the slow part of the season.  If anything, they may drop slightly.)

The market conditions seem to have had an impact on how long it's taking for homes to sell in San Carlos.  The average home in San Carlos has spent 19 days on the market this year before an offer was accepted, which is about 27% longer than last year.  In the bigger picture, 19 days on the market is still an amazingly low number that many communities would love to have.

The lack of home sales can't be blamed for the slower growth in value.  There were more homes sold in San Carlos in the first 9 months of this year (211) versus the same period last year (207), so there has been no letup in the sales activity.  The combination of a strong stock market and extraordinary low mortgage interest make the buying conditions very favorable, and the sales numbers reflect that.

What's Ahead?

Traditionally, the months of November and December are two of the slower months for home sales.  There's less daylight to view homes during the week, and both buyers and sellers alike turn their attention to the holidays.  So the bulk of the fall market falls on the month of October.

Last year in September, 53 new listings hit the market, which represented the highest amount of any month in 2018.  This surge of inventory really put a damper on the fall market, and helped exacerbate the slide in pricing that we were witnessing all summer.  This year there were only 29 new listings to hit the market in September, which helped to keep the inventory levels balanced.

Looking ahead to 2020, it's an election year, which seems to make the market even more twitchy than normal.  We're already feeling the effects that the trade war and recession rumors are having on the stock market, and the political circus will only intensify as we get closer to the election.  Historically, these conditions have never bode well for the local real estate market, so those who are thinking of selling their homes in 2020 might be best served by getting their home on the market earlier in the year rather than later.