“It feels like we have been chasing a ghost.”
It certainly can feel like that. The ever-elusive four bedroom home in the flats, updated and on a nice lot for 1.3M-1.7M….sounds easy enough, right? Think again. As mentioned in previous posts, there is nothing more difficult to purchase right now. A while back I referred to this price range in the flats as the Bermuda Triangle of San Carlos real estate. Those searching for this property usually find themselves scratching their head in a state of confusion wondering when this elusive property may finally show itself.
Why is the four bedroom home in the flats so hard to find?
There are two primary reasons for the lack of inventory for this type of home in the 1.3M to 1.7M price range:
(1) Thank the Great Depression. The smaller lot sizes, especially in White Oaks, cannot support larger homes without sacrificing most of the yard. During the Great Depression, developers tried to give away lots in the failed White Oaks tract. All the future owner had to do was agree to pay the property taxes. If that wasn’t enough to make you sick, consider this: Developers then cut many White Oak lots in half in order to make the property taxes more palpable for future owners….thus the reason for so many White Oaks lots falling under 5,000 square feet.
Helpful hint: Keep in mind that the City of San Carlos will only allow you to build the first floor of your home on 40% of the lot size. So if you have a 4,500 square foot lot and your home is 1,500 square feet plus a 300 square foot garage, you’ve reached capacity on your building ability for a single level home. If you want to add any square footage, you will need to add a second story which is a more expensive proposition and more time consuming as well. Many choose to move rather than go through a second floor addition.
(2) Those that have remodeled, have stayed put. Remember that even twenty years ago San Carlos was nothing close to the town it is today. Before downtown was vibrant, before API scores and before the dot com boom, San Carlos was barely on the map from the perspective of others in the Bay Area. That all started to change in the late 1990s. The first real recent surge in housing prices happened from 1998-2000 and then a second surge from 2003-2007. Those two time periods also represent an era of the first modern remodels in San Carlos.
Why is this important? The point is that many who remodeled in this time period have not been in their homes long enough to consider selling. Many who have had the wonderful experience of living through a remodel will tell you (smiling) they are never moving again. Additionally, those that remodeled during the second surge may not be able to stomach the loss they would take on their home since the market slowed in 2008. Granted, we appear to be in a period of correcting some of those losses, but keep in mind that San Carlos homes that were priced at 1.5M in 2007, lost approximately 15% of their value. Only in the last few months have we started to inch our way back up.
Is there any hope?
The good news is that all signs point to the first positive year in San Carlos real estate since 2007. This will help loosen up some of these types of homes. There are also many little things you can do to better your chances if you find yourself chasing this elusive property. The little things by themselves may not seem like much, but together they are enough to make a difference:
(1) Have a plan. Wandering aimlessly and “waiting for something to come up” is a guaranteed way of not finding the elusive property. Understand that the amount of people looking for this exact home far outweighs the number of actual homes that will become available. Know exactly what you are looking for an be ready to pull the trigger once you find it.
(2) Glue yourself to the market and your agent. Don’t let a day go by where you are not looking at the MLS. Ask your agent to present you with any off-market opportunities as well. If a property becomes available on Tuesday, don’t check your weekend calendar….check your Tuesday evening and Wednesday morning calendar. If there is only one thing to take from this post about the elusive property, understand that if you do not act immediately in terms of investigating one of these types of properties as they become available, someone else will.
(3) Have your financing ready to go. Don’t wait until you find the perfect house to get you financing in order. Often, lining up a valid pre-approval takes a few days. Be sure that you have done this diligence ahead of time.
Be smart about your search and you will get your home.
If you suspect that you are searching for the elusive home, sit down and talk with your agent. If you can develop a smart and aggressive plan, attach yourself to the hip of the San Carlos market and have your financing ready to go, you will find the elusive home.