What do the pending properties on Oakview, Rosewood, Palm, Hill, Lyndhurst, Park, Tamarack, Wildwood and Northam all have in common? They all went pending with multiple offers. Many of those went pending with three or more offers and one with double digit offers. Their status accurately reflects what is shaping up to be a much hotter than expected spring market.
We have known for some time that there was a growing bubble of buyers who were locked in on San Carlos. On the sidelines for much of 2009, and frustrated by the lack of inventory of 2010, many of these buyers are now out in force. Many of these buyers did a great job of timing the bottom of the San Carlos market with historically low interest rates. There was only one small problem……their timing has coincided with extremely low inventory. These same buyers are now involved in an escalated search for a suitable San Carlos home. Many are now feeling the pressure of what should be rising interest rates toward the end of summer.
Fueling the demand is a sudden influx of new loan programs that have more relaxed requirements for borrowers. Some San Carlos mortgage brokers that I work with have been able to find programs with very favorable rates on jumbo loans. Obviously, many San Carlos properties are purchased with jumbo loans.
Finally, the overall economy seems to be picking up just a bit. With the NYSE getting closer to the 11,000 mark, as compared to 6,500 last year, many are clearly feeling more comfortable about a home purchase.
Expect the spike to continue well in to summer as long as inventory remains relatively low.
6 Comments
I’m sure the City hasn’t built any of this into the budget because they always budget for the worst ca.se scenario. The recession is officially over, things are picking up, and SC is going to make irreversible changes to the way the City operates, getting rid of our police dept as quickly as possible.
Bob,
Can you make some recommendations on mortgage brokers your peers are using that have favorable jumbo loan rates?
Thanks!
Hi MC,
Of course. Russell Vavuris at Progression Financial in San Carlos (650) 508-4060. In house at B of A, I would suggest Linda Tsoi at (415) 436-5202. Hope this helps!
Bob
Thanks Bob! I’ll let them both know you referred me.
Bob,
When you say “timing the bottom of the San Carlos market with historically low interest rates” are you suggesting a bottom in price? I highly doubt that we are even close to the bottom in the prices for San Carlos. The extremely low inventory is like you said in your Short Sales post – people are holding out trying to sell at a higher price. That’s going to be a bad move, unless they can keep up with their payments, since we won’t be seeing housing prices go up anytime soon. With unemployment still on the rise, many people who bought during the bubble are underwater, short sales starting to move, and lots of foreclosure and shadow inventory unaccounted – I think we will be seeing prices fall in higher priced area for the next several years. Low interest rate is only a bait for the uninformed home buyer. Once the rate start to move up, home prices is forced to drop – since income remains stable. I would rather pay a lower property tax once home prices drop. The Rent/Buy ratio (yearly rent to home price) is 3-4% which shows the disparity in housing cost. Lastly, I really hope people aren’t looking at the S&P500 to determine their home purchase comfort level.
Thanks for your insight into the SC housing market.
Dan
Dan,
It’s a tough question. At the start of 2009, I said that inventory would be ridiculously low in during the upcoming year and I was blasted by some readers who said that low inventory could not work with a struggling economy. I am not correct on everything (my wife would gladly attest to this), but I feel that I have a pretty good beat on the SC housing market. Whether this is the bottom, or not, is going to depend entirely on short sales. If short sales are more frequent, they will set a lower bar for the different price ranges. If the economy continues to steadily improve and short sales are kept to a minimum, then I do feel comfortable saying that we have come close to a bottom of the market in SC. However, if either of those go sideways, it could be a different story.
Thanks for the post.
Bob