San Carlos Real Estate - March 2012

Buyers Face Competition for Dwindling Supply

The San Carlos real estate market is becoming increasingly inventory constrained. The typical seasonal pattern is for the inventory of unsold homes to peak in the summer, when most sales activity occurs and trough in the winter holiday period. Sure enough, in the latter half of 2011, inventory declined down to 36 homes in December 2011. Curiously, unlike all of the previous recent years, inventory has continued to decline. (In the chart below, the first three months of every year are shaded black to make it easier to see the seasonal pattern). There were less than 25 homes for sale in San Carlos at the end of March 2012, the lowest March total in many years, and the lowest total in any month since December 2004. At the current sales rate, there is less than 1 month of supply on the market, for the first time since 2004.

Sales Up in 2012

One of the driving factors in the inventory decline has been a rise in sales. In the first quarter of 2012, there were 59 homes sold, as compared to 45 homes sold in the first three months of 2011.

Another variable pushing down inventory is that the number of listings is falling. Eighty-six homes were newly listed onto the market in January, February and March, down from 104 homes in the first three months of 2011. The combination of more sales and fewer listings has sharply driven down inventory.

In the near-term, sales activity can remain elevated (indeed, an advance measure of sales that looks at accepted, but not closed offers, suggests strong sales in April), but unless lots of new listings come onto the market, expect sales activity to be tepid for most of the rest of the year. There just are not enough home for sale out there.

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 $550 for the past two years.

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 the past twelve months and has been at or above 100 in eight of the those twelve months. (A reading above 100 means that the sales price was higher than the final asking price). If the ratio is above 100 for an extended period of time it is a good sign that prices are and probably will be rising.

Thinking of buying or selling a home in San Carlos?

If you're interested in learning more about the San Carlos real estate market, considering selling your home in San Carlos, or thinking about moving to San Carlos, please drop me a line and I'd love to connect with you.

By The Numbers - San Carlos Real Estate for 2012