San Carlos Buyer Frustration Hits Fever Pitch
Holding an open house this past weekend was an eye-opening experience. The amount of frustration felt by so many San Carlos buyers was on full display as they went from open house to open house. It was written on their faces and noticeable in their body language. Many of them struck up conversations with each other as they compared war stories of multiple offers and exhibited signs of palpable frustration over the San Carlos housing market. Conversing with others in a similar situation seemed as though it was almost therapeutic for many.
I could empathize with those buyers as I have some of my own buyers who have had a tough time adjusting to a searing hot market. Additionally, I recently sold and purchased a home in San Carlos for my own family and it was not exactly a stress-free process.
There are several contributing factors surrounding San Carlos buyer frustration. The first deals with the fact that many buyers who have been looking for a while simply do not want to recognize that the market has moved substantially in the last twelve months. There was a time in the not too distant past where a 1,600 square foot home with three bedrooms and two baths sold in the high 900s. Today, that same starting price is 1.2M and higher. Part of the reason this market shift is difficult for many to comprehend is that it seemingly happened overnight.
How did we get here? The short answer: a lot of external forces hitting at once
- San Carlos has a build up of buyers from as far back at Q4 of 2008, when the market turned south in a hurry. Many active buyers decided to try and time the bottom of the market while they rented for a few years. Realizing they have missed the bottom, all wanted in at the exact same time.
- Inventory numbers have been historically low, fueling higher prices.
- Rock bottom interest rates are helping to fuel the buyer craze.
- For the Bay Area, especially the peninsula, there is a general feeling that things are back on track for our local economy, encouraging spending in housing.
- The mid-peninsula area is one of the most educated places in the world. It should not be surprising that mid-peninsula areas with outstanding schools are in very high demand.
- San Carlos is being flooded with former buyers from Palo Alto, Menlo Park and Burlingame. Tired of being beaten in these towns, they are seeking refuge in San Carlos where they can flex their muscles a bit more in multiple offer situations.
What can be done?
First, and this is going to sound absolutely terrible, but some buyers simply do not have a plan and are just not educated enough on how San Carlos real estate is really working in 2013. Those that are, and do have a plan, are becoming homeowners. Second, understand what your strengths and weaknesses are as a buyer. Do everything possible to minimize the weaknesses. Each offer situation is different. Learn as much as you can about the seller and their needs beyond the price in a prospective transaction. Tailor your offer accordingly. Finally, remember that every real estate market since the beginning of the first real estate market has had ups and downs. The current cycle we are experiencing will not last forever. Things will eventually calm down. Additional inventory and a slight uptick in interest rates will most likely be the two most prominent factors when the market starts to stabilize.
Don’t Give Up
For those buyers that are going to give it another go this weekend, here are some encouraging ideas to consider: (1) our inventory traditionally increases March though May…..so, in theory, our best inventory months are just ahead of us; (2) if you are well prepared, have a plan to attack the market and are realistic about where the market has gone, you will be miles ahead of many other prospective buyers.
I wonder if the foreclosure mitigation programs in effect are also keeping homes in the hands of borrowers that otherwise would have been forced to part ways with their property, thus contributing to the low inventory.