San Carlos Real Estate: Q3 2024 Market Update.
October 9, 2024
Driving With the Brakes On.
That's about the best way I can describe the San Carlos residential real estate market as we head into the fourth quarter of 2024 (yes, Christmas is only 77 days away). Despite all of the forces that should be propelling our local market forward — lower inflation, lower mortgage interest rates, and rising consumer confidence — the San Carlos real estate market feels like it's pedaling into a strong headwind, and the numbers below back up that feeling.
The charts below show the performance of the San Carlos real estate market for the first nine months of this year compared to the same period of the previous five years. The data is derived from the multiple listing service (MLS), so it does not account for quiet sales that were not reported to the MLS.
Listings, Sales, and Revenue.
The first chart below shows the total sale revenue for residential San Carlos properties, including single-family homes and condos.
The combined sales revenue for both single-family homes in 2024 is nearly 12% below where we were at this time last year, and is at the lowest level for this period since 2017. At first glance, it may not seem like a big deal because, let's face it, the economy hasn't fully recovered yet, right? But literally no other city along the Peninsula is seeing this phenomenon. As I wrote in this post last month, all of our adjacent neighbors on the west side of the bay are seeing significant increases from last year.
So why is this happening in San Carlos? Well, you can't chalk it up to falling prices because you very well know that home prices in San Carlos have gone nowhere but up over the past couple of decades.
The answer lies in the number of sales and listings…or a lack thereof.
This chart shows the number of closed sales for just single-family residences during the first 9 months of the year. Condos and townhomes are excluded from remainder of these charts because they make up less than 15% of any total. Single-family homes drive the San Carlos real estate market.
And what does this chart tell us? The 205 closed SFR sales is not just the lowest total for the past five years, but in the entire recorded database in the MLS. This goes all the way back to 2000, and if I could run the data back further, that number would be much higher than 24 years.
So why are there so few closed sales? Well, if there are fewer homes for sale, there will be fewer closed deals, and that's exactly what is happening. Check out this chart below.
The 200 new single family home listings so far this year is not only a whopping 20% fewer than last year, but just like the number of closed sales, it's the lowest total in at least 24 years — and much likely longer.
It's hard to increase the yield when the farm just keeps getting smaller.
Prices Rise.
The laws of economics tell us that when there is a shortage of goods, the price of those goods tends to rise. Real estate markets usually adhere to these laws, and this is what we are seeing in our local market:
The average price for a single-family home in San Carlos is sitting just over $2.5M, which is the second highest total on record for San Carlos, eclipsed only by the bubble of 2022 that was popped when interest rates started their historic upward climb.
Even though not every home is fetching 10 offers and selling for 6-figure premiums, this does underscore the fact that there are still far more buyers in the market than seller, and this keeps prices high.
High Hopes for 2025
Looking ahead to the fourth quarter of this year, even if we have a significant uptick in listings it's likely that 2024 will still finish lower than 2023 in the area of closed sales and total revenue (the metrics that count the most). There's just not enough runway in the 4th quarter to rebound that quickly.
Most experts point to 2025 as the most likely bounce-back year. The tipping point for a 30-year fixed mortgage is about 5.8%. These same experts concur that once the benchmark rate for this loan settles around 5.8% or lower, that will be enough to convince more homeowners to finally put their homes on the market and move to the next chapter in their lives.
In addition, the Presidential Election will finally be in the rear-view mirror as will many other distractions, and we can get back to the business of buying and selling houses.
I hope you found this information useful. Feel free to add your comments below, or reach out if you have specific question.
Posted in:
Hi Chuck, thanks for the post. If 2025 becomes a “bounce-back” year, as in more supply on the market, do you foresee a decline in home price in San Carlos?
Thanks for your comment and your question. I personally don’t see prices declining in San Carlos next year. The increase in inventory is not going to flood the market. IF rates continue to drop (and that’s still an if at this point), it will indeed entice some reluctant sellers to finally move, but it will also bring more buyers back into the market. We’ve been in a situation for the past 17+ years where buyers far outnumber sellers, which is what keeps prices on the incline. There should be significantly more homes changing hands next year, but increased buying competition is going to keep prices steady.
Thanks for the forecast, Chuck! I guess only time will tell. Your blog is the single best resource for San Carlos real estate and I appreciate your efforts in keeping track of all the new listing, pending and sold homes on a weekly basis!
Thank you!!