The emergency 3/4 rate cut by the Federal Reserve on Tuesday is likely to make the San Carlos real estate market even tighter.
Start with the fact that San Carlos has only 33 homes on the market. The vast majority of these homes have been sitting for longer than 8 weeks on the market, and many have been sitting for longer than 100 days. Why? Many have sellers with unrealistic expectations on price. Do you know a local San Carlos agent? Ask him or her if they have a client actively trying to find a property in San Carlos. My guess is that, not only will they answer in the affirmative, but they will give you an exhaustive, “Yes, but there is simply nothing on the market!” I have four groups of buyers currently looking in San Carlos and the process has been very frustrating. Those of you that keep a close eye on the market probably noticed that most of the properties that came on right after the first of the year sold immediately.
The recent rate cut by the Federal Reserve will have an indirect impact on mortgage rates, but it will directly affect home equity lines of credit. Keep in mind that many people who buy in San Carlos use an 80-10-10 program. This means they take out a first mortgage for 80%, a home equity line for 10%, and 10% cash. Many home equity lines are tied to the movement of the discount rate which is controlled by Federal Reserve. Obviously, the Fed has slowly trimmed the discount rate over the past year. However, the additional 3/4 of a point deduction yesterday is likely to inspire even more buyers in San Carlos who may have been on the sidelines. The result is even more buyers competing for very little inventory.
The Spring home buying season in San Carlos is off to a frantic start with the new inventory being gobbled up with multiple offers. At this point I am ready to amend my earlier forecast of a decent market for San Carlos sellers, to what could be a very profitable market for those sellers who price their home appropriately and wisely choose their timing.