The San Carlos Real Estate Market Recovers from COVID – For Now.
October 13, 2020
Playing Catch Up.
2020 started off with so much promise for the San Carlos real estate market. For the first three months of 2020, the total sales volume of residential real estate (single-family homes and condos) was actually running about 2.3% higher than the same period in 2019. This was in line with the year-over-year growth that we've witnessed in the local market over the past several years. (The days of double-digit annual price growth are history, at least for now).
Then the calendar hit 3/17/20 and the Bay Area virtually stopped in its tracks.
The resulting shelter-in-place had a paralyzing effect on the market. Property showings and open houses were prohibited, thus making it almost impossible to buy or sell a home. For the listings that were already in contract, new obstacles suddenly appeared in the process, and quite a few didn't make it to the finish line. It wasn't until the County slowly started to loosen the restrictions on residential home sales in early May that we started to see activity in the market again.
The graph below shows the total sales volume by month in San Carlos so far in 2020, and it tells several interesting stories. The first and most obvious shows how the market absolutely plummeted in April after the SIP kicked in. Normally we would expect to see steady growth from March through June as the spring real estate market hit full stride. But in 2020, the volume dropped by 50% almost overnight.
In just 3 short months, the market went from being 2% ahead of the sales volume in 2019, to 17% below – that's how dramatic the drop was in the first half of the year.
A Record September.
The second interesting story in the graph above is behavior of the market in the second half of this year. Traditionally, our market cools down over the summer months as buyers take a break from house hunting and enjoy a few months of vacation. In 2020, the market didn't follow this pattern because most people couldn't take lengthy vacations as they did in the past. In essence, the activity that we normally see in the Spring market simply shifted to the right, setting the stage for a massive surge in Q3.
The sales volume in Q3 of 2020 skyrocketed to over $274M, or an increase of 35% over the same period in 2019. Much of this surge can be pinned on the month of September, when the needle pinned at $104M, marking the first $100M month in San Carlos residential real estate, and setting an all time record for residential sales for any month in San Carlos, not just September.
What drove this surge? It was the same elements that have driven the market to record heights every year over the past decade — rock-bottom mortgage interest rates, and a surprisingly resilient stock market. Those people who felt secure enough in their employment leveraged these very favorable conditions to either purchase their first home, upsize to a larger home to accommodate remote working, or simply moved out of the area.
Caught Up to 2019.
The fabulous results that we saw in Q3 allowed the 2020 market to finally catch up 2019. Heading into Q4, the San Carlos residential real estate market climbed out of the shadow of 2019 and generated $554M in sales for the year to date, compared to $527M for the first three quarters of 2019 — or an increase of about 5%. This is an amazing feat, considering how far behind we were only 6 months ago.
But this doesn't mean that everything is going to be rosy going forward. We're exactly three weeks away from what will be the most contentious presidential election in decades (if not ever), and a likely resurgence of COVID in the winter months could put yet another damper on the San Carlos real estate market. But for now, it's a great sign to see business “almost” back to normal.