A massive congressional bailout of the financial markets, 500+ points-a-day swings in the stock market, a recession, high gas prices…..is there any good news? And what does it all mean for our San Carlos real estate market? On its face, the aforementioned news would seem like daggers into what has been a very solid San Carlos real estate market for the past ten years. First, it would be completely naive to suggest that the financial woes of the country will not have some negative effects on our local market. However, I am going to suggest that the woes will not be as dire as some will have you believe. So, before you give up and move to Nevada, consider the following:
(1) Local Economy. While the majority of the United States is experiencing a very difficult economy, our local economy is steady. Granted it is not as robust as a few years ago. However, our larger private sector businesses such as technology, biotechs and e-commerce companies are still hiring. During, and just out of law school, I was fortunate enough to work for one of the largest corporate law firms in the United States. As a result, I developed many friendly contacts with venture firms. After speaking with a few of them over the past few days I started to get the same story. While venture firms are obviously very concerned about the national economy, it is not going to distract them from continuing to support their local companies, investments…i.e. start-ups. Additionally, while I would never want to make light of a situation where someone is unemployed, the fact is that unemployment is not an immediate concern for us. It is a major concern in other parts of the country.
(2) Foreclosures/Short Sales. As mentioned in prior blog posts, San Carlos is not a haven for foreclosures and short sales. We are not Stockton or the East Bay. The effects of the credit market implosion have created more of an indirect effect, rather than a direct effect. For the most part, sellers in San Carlos do not have to worry about their value being brought down by the sale of a local foreclosed property. San Carlos buyers and sellers are more concerned with the variety of and availability of loan programs provided by banks who have been hit hard by defaults of borrowers around the country.
(3) Current Buyers and Sellers. Current buyers and sellers in San Carlos seem to be taking the news in stride. Most of my buyers feel that it is a good time to buy. My sellers who will have their homes hit the market in the next two weeks are realistic about the market. They understand that it is not 2005. They understand that there may be some negotiating ahead of them. Additionally, and perhaps more important, potential buyers in San Carlos are not likely to be the ones suddenly locked out of the tightening mortgage market. More succinctly, buyers in San Carlos are not patching together 5-10% downpayments along with their $1,200,000 loan. Most buyers in San Carlos are putting at least 20-30% down. Loan programs are still readily available for those with 20-30% down and solid credit.
The one question that remains unanswered is whether the more heavily effected local markets will be at such a discount that potential buyers cannot help but forgo the opportunities in San Carlos for an outstanding buy in another town. Its been my experience that most people who buy in San Carlos are specifically looking in San Carlos. It would take a fantastic opportunity to lure them away. Whether this opportunity will exist, and whether the buyers will follow, is yet to be determined.
10 Comments
Bob,
Thanks for the great information. My husband and I are looking to buy a condo/townhouse in San Carlos. How do you consider that market for San Carlos in terms of demand, resale and pricing. I only found mentions of SFR here. Do you similarly discuss townhomes on the blog?
Thanks,
Hi New to San Carlos,
Thank you for your post. I appreciate you taking the time to read the San Carlos Blog.
First, I do not spend nearly as much time as I should posting on the condo/townhouse market in San Carlos. There certainly are plenty of people looking to buy townhomes and condos in San Carlos.
Currently, there are 19 condos and townhomes for sale in San Carlos. The overwhelming majority of those are located at the top of Crestview. They range in cost from 450K-900K. Additionally, San Carlos has 5 townhouses/condos which are pending. The most expensive pending home is 750K, which is noteworthy.
I do not think there is any question that the San Carlos condo/townhouse market is not as healthy as the single family home market. That being said, prior to commenting on your exact situation I would need to know what price zone you were looking at for your prospective condo and what areas of San Carlos you were considering. There are a few areas I would definitely avoid for a condo purchase in San Carlos. I cannot post the particular areas to avoid on the blog, but if you want to send me an email I would be happy to provide that information to you.
Thanks again for the post.
Bob
Bob,
A friend recently told me that there are currently close to 300 properties in San Carlos in foreclosure which if memory serves me correct accounts for 1.5% of homes (out of 20,000 homes) in San Carlos. Not sure where my friend got her numbers, but how does this compare historically to the foreclosure rates in San Carlos?
Hi ACintheSC,
Was your friend referring to San Carlos, Mexico? I have heard some ridiculous things this year, but that one takes the cake.
Currently, there is only one Single Family Residence on the market in SC which is in foreclosure, and that one will be in contract shortly. Without proof to the contrary, I would totally ignore that information.
Bob
There is also a San Carlos in SoCal. I stumbled upon it one time while googling our city. From Wikipedia “San Carlos is a middle-class neighborhood in the eastern area of San Diego, California”
Yahoo Real Estate Foreclosures lists 26 houses in SC, but they are mostly notice of default with some REO sprinkled in. I don’t know how accurate the data is on that site.
Hi Lisa,
Thanks for the info. These days, banks are not giving any grace period whatsoever prior to filing the notice of default, which may be contributing to the 26 homes that you see listed with Yahoo. I would also speculate that many of those filings are in regard to condos, not single family residences.
Bob
Bob – Does the notice of default mean you haven’t made a payment, but still can make your mortgage payment (assuming you could come up with a payment) and save your home or is it too late at that point?
Hi Lisa,
A notice of default means that the borrower is more than 30 days late with their payment and the bank or mortgage holder has taken the step to actually start the foreclosure process by filing the notice of default with the court. Once the notice of default is filed, it is normally a minimum four month process before the property can revert back to the mortgage holder.
Bob
The +300 figure comes from realtytrac.com — when you search by 94070 it does show 337 bank owned properties — the catch is that once you click into the bank owned properties section it lists all of the bank owned properties in ALL of the surrounding cities. When you look at the map of bank-owned properties actually in San Carlos there are only 8 properties (and unless you join their website it is hard to determine if they are commercial/condos/homes). Again, it certifies that the 300 homes figure is extremely high and incorrect.
Hi ACintheSC,
Great information! Thanks for the follow-up!
Bob