If the San Carlos real estate market could be personified it would be viewed as a gritty, stubborn prizefighter known for carrying grudges. The current grudges that it seems to be carrying can be summed up as 2009 and 2010. Almost angry at the fact that it faced losses in those years, the San Carlos market has been taking its frustration out on would-be buyers for the last eighteen months and seems content to deliver a decisive blow each time they decide to slowly pull themselves up off the canvass to one knee while steadying themselves against the ropes around the ring.
The anger and frustration is not just limited to the market itself, it’s affecting buyers, sellers and agents:
Buyers. Buyers are obviously the group taking the brunt of the frustration. Repeatedly being beat out by one-up offers, all cash offers, pre-emptive offers and a host of other strategies, buyers are beat up and depressed. For some, the market has simply passed them by and the dream of owning a San Carlos home has gone by the wayside. Some tried to time the bottom of the market too perfectly, others refused to get in front of a market that was clearly on the rise. As mentioned before, absent a more challenging location, the hope of owning even a 2/1 for 1 million dollars or less in west San Carlos has pretty much been completely extinguished.
Sellers. For many buyers, any seller frustration is going to fall under the category of “cry me a river,” but believe it or not there is seller frustration. Let me first start by saying that we are one hundred and eighty degrees from where we were a year ago. By saying that, I mean that a year ago many would-be sellers had not quite gotten he message on just how good our market had become and many were still stung from 2009 and 2010, reluctant to go back into the market. Fast forward one year later and, clearly, sellers have gotten the message. From what I have seen talking with prospective sellers and what I have heard from other agents in San Carlos, some sellers may be having trouble recognizing that, even though our market is a fantastic seller’s market, there are limits. Not every house is going to sell at 300K over the list price with 20 offers. Additionally, you cannot expect the same price for a house on a busy street as that same house on a less traveled street. The market is very strong, not senseless. This will be the key point to our market over the next year….more on this point below.
Agents. Before you roll your eyes, yes, I realize that the general public is not going to spend one nanosecond thinking about the frustration on behalf of agents. However, agents are a part of our market and it is always good to at least understand how everyone fits into the puzzle that is San Carlos real estate. I frequently hear that agents must love the current real estate market and that it must be a great time to be an agent. The insinuation is that because property values are skyrocketing, agents are doing very well. This correlation that most people believe exists, in fact, does not. Agents have their best chances for success when the market is very balanced, not when it is one-sided. Remember, if your home gets ten offers, nine agents spent a substantial amount of time preparing that offer and their client for that presentation. When offers are expected to be clean, due to market conditions, the workload ahead of preparing the offer is much more extensive as well. Replicate that same procedure seven or eight times for agents with buyers who keep coming up short, and it can amount to quite a bit of work. Often times, especially in markets like these, buyers can give up or end up priced out entirely after going through the process for many months with their agent.
What does it all mean?
I hate predictions. I especially hate predictions on the San Carlos real estate market. The only thing I feel safe in predicting is that most predictions on the San Carlos market will be dead wrong and they are well above the pay grade of most people giving them, including myself.
Here is what I do know: I am fully immersed in San Carlos real estate, all day, every day. It is what I do for a living. It’s what I get asked about at social gatherings. It’s what I do. With that in mind, here is what I feel comfortable saying about our current market:
It is becoming painfully obvious that the one thing that will even our market out to a more healthy growth rate has nothing to do with the overall economy, interest rates or supply and demand. All of the expected culprits will not be a noticeable factor. What will be a factor is the ever-widening gap between what buyers will put up with and the gaudy expectations of sellers. Buyers are on the brink, in my estimation. You can see it on their faces. I can see it on the faces of my buyers and almost every buyer that walks through an open house that I happen to be holding. It’s gotten so bad, that many buyers walking through an open house never even consider the fact that they may be able to purchase the house for the list price. The asking price is almost irrelevant. The thought going through their heads centers on just how far over the list price they need to go to get the house. In many sellers’ minds, whatever that number is, may not be enough to satisfy them. Sooner, rather than later, the nexus that holds these two interests together is going to slightly detach. Suddenly, in a real estate game of musical chairs, one home is going to be left without a chair and the market will start to gravitate toward a more healthy pace. For now, we are probably a few months away from any type of more healthy market. There are some very nice listings coming up in San Carlos in very prime locations over the next few weeks. The interest surrounding those particular listings will be massive and substantial. It will be enough to keep up the pressure on buyers for some time. However, for now, I will do what I hate most, and say that sooner rather than later, 2014 will see things even out.
Bob, we should also mention that the rental market is just as angry. Highly qualified renters are also having a very difficult time with housing, I have had multiple offers on my last five rentals and the competition was fierce. Carrie Du Bois, Coldwell Banker San Carlos