San Carlos Real Estate - June 2012

Raziel Ungar

July 9th, 2012 - 3 min read
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Second Month of Selling Values Above List Prices

For the second straight month, the average ratio of selling price to list price in the San Carlos real estate market was well above 100%. In fact, it was over 104% in both May and June of this year. This means that on average sellers were receiving 4% more than their final listing price. While 4% might not seem like a lot, with average selling values around $1 million, that is an extra $40,000.

This is a hugely positive sign for sellers and a strong indication that many properties are receiving offers from multiple buyers. The last time we saw ratios like this was at the end of 2007. It is a sign that prices are poised to rise. We are seeing similar experiences in other Peninsula communities like Burlingame and San Mateo.

Market Still Very Inventory Constrained

One of the likely drivers of offers above asking prices is the extremely low inventory rates. At the end of June 2012 there were about 30 unsold homes on the market. Last there at this time, there were 72 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. With strong buyer demand driven by a healthy local economy and favorable interest rates, there just isn't enough supply to go around, leading to the aforementioned offers above asking.

Sales Up in 2012

One of the driving factors in the inventory decline has been a rise in sales. In the first six months of 2012, there were 162 homes sold, as compared to 133 homes sold in the first six months of 2011. That is an increase of 22%. At the current rate, we are on pace for 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 19%. The ratio of the number of sales to the number of listings in 2012 has been 84%. In the first five months of 2011 it was 55%, though it ended up the year at 70% (there is a lot of seasonality in the number). Eighty-four 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. This high ratio is indicative of sellers receiving the price that they are looking for.

 

The average days on market has been fairly low in the past two months, at about 3 weeks. In the beginning of the year, the average days on market for sold homes was closer to 6 weeks. The lower number we have seen in the past few months is a sign that a lot of the homes that had been hanging out on the market have been scooped up. With around 30 sales per month, even 1 or 2 listings that have been on the market for a long time can skew the average.

Few Signs of Price Appreciation, Yet

Our normal measure of price levels, average price, median price and average price per square foot, show no solid signs of increase yet (even when we look at the month-to-month values, not the 12 month averages). But with buyers bidding above asking prices that is likely to change, particularly with the low interest rates playing a role in driving demand. How can we be so confident? Well, most sellers set their asking prices based on past comps, maybe a little higher or a little lower depending on how motivated they are to sell or what their read of the market is. If selling values are above list prices then this suggests that selling values are above past comps, hence prices are rising.

In a small real estate market like San Carlos, on a month-to-month basis prices fluctuate more based on what happens to sell that month (bigger or smaller homes, etc...) than on changes in the underlying price level.  We will have to wait a few more months to see if there are any underlying changes.

By The Numbers - San Carlos Real Estate for 2012

Current Month YTD Total or Average
June 2011 June 2012 Jan - Jun 2011 Jan - Jun 2012
Sales 37 33 133 162
Days on Market 31 20 26 35
Months of Supply 1.9 0.9 2.9 1.1
Average Price $925,000 $1,131,000 $969,902 $1,012,877
Median Price $875,000 $1,090,000 $939,511 $944,185

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.

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