San Carlos Real Estate - May 2012

Market Still Very Inventory Constrained

The inventory of  homes for sale in the San Carlos real estate market remains low. At the end of May 2012 there were about 30 unsold homes on the market. Last there at this time, there were 71 homes for sale! That means that each buyer has fewer than half as many homes from which to choose and each seller has half as much competition from other listed homes.

An indication of the shift to a seller's market in San Carlos can be seen by looking at the number of cancelled and expired listings. These are often listings that are not receiving good offers (though can also be sellers who have had a change of heart). In the first five months of 2011, 45 listings left the market this way. In the same period in 2012, only 20 listings have gone off the market in this manner. This is a sign that more and more seller's are hitting their pricing in the market.

Sales Up in 2012

One of the driving factors in the inventory decline has been a rise in sales. In the first five months of 2012, there were 129 homes sold, as compared to 96 homes sold in the first five months of 2011. That is an increase of 34%. At the current rate, we could see more than 300 homes sold in San Carlos for the first time since 2005. Sales reached a nadir in 2009 when there were 236 transactions.

Reaching 300 sales will probably require an uptick in the number of new listings coming onto the market. So far this year, listings are down 18%. The ratio of the number of sales to the number of listings in 2012 has been 80%. In the first five months of 2011 it was 49%, though it ended up the year at 70% (there is a lot of seasonality in the number). Eighty percent is a very high figure, as even in a hot market there are homes that do not end up selling, sellers that change their mind and pull their listings, or homes that are re-listed more than once due to various reasons. In the 2004 and 2005, when prices were rising sharply, the full-year ratio was 86% and 77%, respectively.

 

We mentioned a phenomenon about the average days on market last month, but it is worth mentioning again. The average home sold in San Carlos in 2012 was on the market for 38 days, up from 24 days in the same period in 2011. Is the average home really taking 2 weeks longer to sell? Not likely, given the lack of inventory. Rather, homes that languished on the market for multiple months and would normally not get any takers are being sold. For a short while this raises the average days on market. Once these homes are gone the average days on market should decline sharply.

Few Signs of Price Appreciation, Yet

When inventory levels fall sharply, prices often rise in response as buyers have to compete against each other for fewer and fewer for sale homes. To-date, we have not seen strong signs of price appreciation in San Carlos. In fact, despite some up and down blips, average and median selling values remain in the $910,000-$950,000 range. The average price per square foot has remained approximately $540 for the past eighteen months.

The data does suggest that buyers are making offers that match sellers' asking prices. The average sales price to list price ratio has averaged 100% in 2012. (A reading above 100% means that the sales price was higher than the final asking price). The ratio was below 100% ever year from 2008 to 2011 (when prices were flat/falling) and above 100% every year from 2004 to 2007 (when prices were rising). The ratio in May 2012 was 104.8%. While we do not want to overemphasize a single month, this is the highest monthly figure seen since 2005! It could be a sign that prices are due to an uptick.

By The Numbers - San Carlos Real Estate for 2012