The White Oaks Blog

San Carlos Inventory Analysis

Quite a few homes closed escrow this week, which is to be expected after the brisk activity we saw in May and June.  In normal years, the market starts to simmer down for a couple of months as people head off on vacation.   It will be interesting to see if the same pattern holds for this year.

Here’s a snapshot of the San Carlos market, as of 7/4.  The previous week’s stats are in parentheses:

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San Carlos Home Sales

Below are homes that sold this past week in San Carlos. Click on the respective addresses to get all the details.

3464 Brittan Avenue, San Carlos

3464 Brittan Avenue

• Pictured Above — Sale Price: $1,360,000.  Original List Price: $1,450,000.  Difference: $79,888 (7.6%) below original list. DOM: 112 Days under current MLS # 80904140. Listed by Timothy Gilmartin of the Gilmartin Group.

65 Maple Way

• Sale Price: $970,000.  Original List Price: $1,049,888.  Difference: $79,888 (7.6%) below original list. DOM: 88 Days (what’s with all of these 8’s???) under current MLS # 80911875. Listed by Steve Eldridge of RE/MAX Today.

2107 Cedar Street

• Sale Price: $965,000.  Original List Price: $1,025,000.  Difference: $60,000 (5.8%) below original list. DOM: 93 Days under current MLS # 80922936. Originally listed under a different MLS # at $1,099,000 (-12.2%).  Listed by Ronda O’Leary of Cashin Company.

2305 Howard Avenue

• Sale Price: $920,000.  Original List Price: $949,000.  Difference: $29,000 (3.1%) below original list. DOM: 38 Days under current MLS # 80920298. Listed by Erika Demma of Coldwell Banker.

2024 Greenwood Avenue

• Sale Price: $918,000.  Original List Price: $929,000.  Difference: $11,000 (1.1%) below original list. DOM: 1 Days under current MLS # 80928603. Listed by David Young of Coldwell Banker.

925 Bauer Drive

• Sale Price: $900,000.  Original List Price: $899,000.  Difference: $1,000 above original list. DOM: 17 Days under current MLS # 80924127. Listed by Dolly Ramos of Prudential California Realty.

1201 Dayton Avenue

• Sale Price: $835,000.  Original List Price: $844,000.  Difference: $9,000 (1.1%) below original list. DOM: 64 Days under current MLS # 80927170. It originally listed under a different MLS # at $885,000 (-5.6%).   Listed by Mike and Sandy Rostad of Coldwell Banker.

2025 Greenwood Avenue

• Sale Price: $840,000.  Original List Price: $839,000.  Difference: $1,000 (0.1%) above original list. DOM: 11 Days under current MLS # 80926253. Listed by Len Moore of Vilmont Investment Properties.

849 Elm Street

• Sale Price: $625,000.  Original List Price: $649,000.  Difference: $24,000 (3.7%) below original list. DOM: 1 Days under current MLS # 80930034. Listed by Justine Ford of RE/MAX Today.

425 Cedar Street

• Sale Price: $610,000.  Original List Price: $750,000.  Difference: $140,000 (18.7%) below original list. DOM: 78 Days under current MLS # 80914536. Listed by John Shroyer of RE/MAX Today.

2743 San Carlos Avenue

• Sale Price: $540,000.  Original List Price: $615,900.  Difference: $75,900 (12.3%) below original list. DOM: 78 Days under current MLS # 80839669. Listed by Michael  Ames of Patriot Properties.

278 Vine Street

• Sale Price: $530,000.  Original List Price: $600,000.  Difference: $70,000 (11.7%) below original list. DOM: 0 Days under current MLS # 80924581. Listed by Gail Aknin of Cashin Company.

(Click this button to see all of the homes that have sold in San Carlos in the past 3 months.)

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Homes Pending Sale in San Carlos

This was the week of the “senior citizen,” so to speak, for some old listings finally getting into contract.  Nice to get these ones moving along…

• 643 Dartmouth Avenue went pending after a total of 246 days on the market.
• 811 Chestnut Street is now pending sale after 124 days on the market.
• 1024 Inverness is pending sale again — it’s at 289 days.

(Click this button to see all the homes that are Pending Sale in San Carlos.)

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New Listings in San Carlos

Below are the new listings that hit the market this past week in San Carlos. Click on the respective addresses to get all the details.  (Note:  If  a generic map comes up instead of a property profile, it likely means that particular home  is already Pending Sale.  Click the link in the “Homes Pending Sale” section to check.)

143 Mesa Verde Way, San Carlos

143 Mesa Verde Way

• Pictured Above:  $1,350,000– 3BR/2.5BA, 2,470 sq ft on a 10,080 square foot lot.    MLS# 80931337, listed by Stephen Hicks of Gateway Properties.

1805 White Oak Way

• $1,075,000– 4BR/2BA, 1,530 sq ft on a 5,500 square foot lot.    MLS# 80931781, listed by John Shroyer of RE/MAX Today.

465 Dartmouth Avenue

• $935,000– 4BR/2.5BA, 2,230 sq ft on a 5,980 square foot lot.    MLS# 80932141, listed by Kathryn Eckardt of Cashin Company.

304 Cedar Street

• $729,950– 3BR/1BA, 1,240 sq ft on a 5,180 square foot lot.    MLS# 80931996, listed by Alex Lehr of Lehr Real Estate.

965 Chestnut Street

• $650,000– 2BR/2BA, 1,650 sq ft on a 5,885 square foot lot.    MLS# 80931746, listed by Patrick Ryan of Alain Pinel Realtors.

1009 Holly Street

• $450,000– 2BR/1BA, 840 sq ft on a 5,750 square foot lot.    MLS# 80931323, listed by Bill Manolis of Manolis MV Properties.

(Click this button to see ALL of the homes currently for sale in San Carlos.)

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(The “San Carlos Week in Review” series is a summary of new listings and home sales in San Carlos for the prior week, and an occasional podcast mixed in to keep things lively. Between the two, you should get a great idea of what happened last week in San Carlos real estate.)

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June Swoon?

Not really.  There was no swoon in June, but it wasn’t a blowout month either.   Entering last month, I stated that there was the potential for 30 sales to close in June,  but it fell a little bit short at 23.   Nevertheless,  it was still easily the best sales month we’ve had so far in 2009.  That’s not bad considering where the economy is at.

The average sales prices reflect what I’ve been saying all year — the demand for homes under $1M is dominating our real estate market market this year.   In fact, of the 94 homes that sold in San Carlos so far in 2009, 63% of them sold for under $1M.   Contrast that with 2008, when 46% sold for under $1M during the same period.   The economy, interest rates, and a plethora of first-time buyer incentives have simply made this segment more attractive than the higher end.    But look for that to change a little bit as prices continue to fall and lenders like Bank of America start to roll out some attractive jumbo loan packages.

Here’s the story:

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General Trends

Here’s a graphical look at the monthly sales performance in San Carlos, dating back to last year.   See below for a more in-depth analysis.

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June 2009 Stats.

Here’s the summart from June ‘09 compared to the same month in 2008:

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YTD Sales Figures Through June ‘09

Here’s a snapshot of the unit sales to date in 2009, compared to previous years

And here’s the same data as above relative to the first half of the year…

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Looking Ahead…

The big question right how is whether the real estate market will take it’s normal summer siesta in July and August.   As you can tell from the annual graph above, October and November escrows drop precipitously every year, reflecting the sales activity during the summer months.    But this year could be different from past years — interest rates are starting to creep upwards, and most of the home-buyer incentives are due to expire at the end of the year.  There are definitely reasons to keep shopping.

There are about 27 homes that are in contract right now that could possibly close escrow in July.  If so, that would surpass June as the best month so far in 2009.   Let’s hope….

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July is the month…

…but we don’t yet have an exact date.   But it’s progress.  According to an email I received today from Matteson Development Partners, the long awaited grand opening of the 1001 Laurel Street complex will take place sometime in the month of July.   They will update everyone on their email distribution list as soon as the date is nailed down.

Register for updates.

Matteson is planning a “VIP sneak peek” preview for those who have already registered online;  this preview will be held before the public grand opening.  So if you’re interested in getting in as soon as possible, be sure to register at their site:  1001 Laurel Street.

As soon as I get a definitive date on the grand opening, I’ll post it on the site. Stay tuned….

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The Three Outcomes

As a home buyer, you’ve likely made up a list of homes that you want to see.  These homes made your list because they met some or all of the preliminary criteria you put in place for your ideal home;  price, location, bedroom/bath count, school district, etc…   Since you’ve done your homework, you’ve weeded out the ones that are out of your price range, or have some sort condition that’s a show stopper for you.   So your list is already “qualified.”

You now get in the car to head out and “tour” these qualified homes.   As you exit each one of these houses, your brain will automatically file each one into one of three basic categories:

1. You like the house, and you think it’s priced well.
2. You don’t like the house, regardless of the price.
3. You like the house, but you think it’s priced too high.

The outcome of the first two scenarios if obvious — you’ll likely jump at writing an offer on the first, and you’ll never write an offer on the second.   But interestingly, many buyers miss out on that third category of homes.  Why?  Because they simply move on to the next house, assuming this one will never be a good deal…or, they decide to sit and wait for the price to drop to a point that it will be a good deal.   Neither of these choices is necessarily the best, but more on that in a bit.

The Honeymoon.

When a home hits the market in San Carlos, you’ll generally know within the first 14 days whether it “hit the mark” on pricing.  Why 14 days?  This allows time for a broker’s tour, and at least one open house weekend, and then a day or so to take offers.  I call this the “Honeymoon Period.”   Generally speaking, if a home isn’t snapped up within this period, the market has effectively spoken with its feet that something isn’t quite right with the pricing.

That’s a pretty bold statement, but I contend that the stats on this blog back it up.  Even in slow times, the demand is high enough in San Carlos that new listings have been disappearing inside of the 14-day window when they’re priced right.

The 30-day price reduction.

When a home hasn’t fetched a buyer during the honeymoon period and there’s no clear indication that one’s on the horizon, sellers start to plan for the inevitable price reduction…after all, the market has spoken, right?   And when do they normally reduce the price?  Right at the 30-day mark.  Why?  I have no idea, other than it’s a big round number.   But the “why’ isn’t important.  The fact that the market has become conditioned to expect a reduction at about the 30-day mark IS important.

And this is where the buyer’s mistake comes in.

Wait, and expect company.

Our hypothetical buyers above has now found a home that they like, but they think it’s priced too high.   So they decide to wait.  Sure enough, they were  right…the honeymoon comes and goes without an offer,  and now it’s knocking on 30-days.   Almost magically, the seller has softened up and drops the price at the 30-day mark to something that makes more sense.    Suddenly, our Category 3 home becomes a Category 1 home.  Eureka!   They’ve got the seller over the proverbial barrel.   They jump in to start the negotiation..  But what’s this?

We’ve got company…

This sure-fire negotiation strategy has now backfired, because it has become a multiple-offer situation.  Why?  Because another buyer did exactly the same thing.   They waited for the price to drop to where it should have been in the first place before starting the negotiation.   Now, any leverage they thought they had by letting the home languish on the market is gone in a flash…simply because there’s another offer to compete with.

Do your homework, drive your deal…

What should have our unlucky buyers done to avoid this?  Clearly, if a home is over-priced, there will be a mountain of data from comparable home sales to prove this fact.   A good Realtor who knows his target-market well will know that a home is over-priced almost intuitively, and can back up this “gut-feel” with solid data.

Rather than wait for the seller to make the first move, the buyer should write an offer (no verbal what if’s) based on what they truly believe the home is worth.   The more facts they can present in a non-threatening manner to back up their position, the better.   Note that this is far different than submitting a low-ball offer.   You’re not insulting the seller, because you have market data to back up your price.    With facts in hand, the worst thing that can happen is that seller says no, or counters your offer.

Or, better yet, you’ll get the house you want for the price you want….while everyone else is just waiting.

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“For First-Time Home Buyers” is a new category on the site that’s a resource for first-time home buyers in San Carlos, and for those who have general real estate questions.

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Click Away

One of the really cool things about blog analysis software is that it gives the author a good idea where people are clicking on the blog, which essentially tells the writer what the readers are finding most interesting and relevant. (Important note: I can’t tell who is clicking, just where…so your privacy is totally safe.) I spent some time this weekend analyzing how people use this site, and what they tend to read the most. The answer was very clear:

Home Sales Data

The most clicked links on this site (by far) have to do with home sales data. There’s a shocker – it is a real estate blog, after all. Whether it’s homes for sale in San Carlos, pending sales, or homes that have already sold, readers want real data on what’s happening in the San Carlos real estate market, and this information is usually not that easy to find. Until now…

New Buttons

While I haven’t changed the background (a.k.a. theme) of this blog in the past 2 years, I have changed the structure quite a bit. It’s akin to putting new buttons on an old coat — I simply haven’t found a better “coat” for this site, so I’ll continue to change the buttons to make it better.  And here are three new ones that you should know about: (go ahead and click one of them)

How to use ‘em…

You’ll find these three buttons conveniently located at the top of the site, right in the middle.   The subject content is pretty self-explanatory, but there’s a lot more information here than meets the eye.  Let’s look at an example:

If you simply click on the “Homes Sold” button at the top, it will show you ALL of the homes that have sold in San Carlos over the past 6 months — in a single click.  Once you’re in there, you can sort by price or by square footage.  Pretty cool, eh?

But let’s say you’re interested in homes that sold only in White Oaks, or just homes that sold for less than $1M?    Got you covered.   If you move your cursor over the “Homes Sold” button at the top of the blog (not the one in this example,) you’ll see a whole array of options magically appear below the button…including “Homes Sold in White Oaks” and “Homes Sold in San Carlos: <$1M” just to name a few.   Simply move your cursor down, and it’s there — all in a single click.

The same principle works with the “Homes for Sale in San Carlos” and “Pending Sales” buttons.   And the data is pulled from a live feed, so it’s always current.   So go ahead and try them out, and let me know what you think.  If there’s a different way that you want the data sliced up, just let me know.

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San Carlos Inventory Analysis

There was a bit of a change in the mix this week — for many weeks now, homes in the sub-$1M sector have made dominated the number homes for sale in San Carlos.  This week, the $1M-$1.5M segment picked up 4 new listings and edged into the lead.  It will be interesting to see how many of these remain in that range when they do sell.  That should give us a good indication of the relative health of the real estate market in San Carlos.

Here’s a snapshot of the San Carlos market, as of 6/27.  The previous week’s stats are in parentheses:

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San Carlos Home Sales

Below are homes that sold this past week in San Carlos. Click on the respective addresses to get all the details.

2048 Alma St, San Carlos

2048 Alma Street

• Pictured Above — Sale Price: $1,739,500 Original List Price: $1,899,950.  Difference: $160,450 (8.4%) below original list. DOM: 221 Days under current MLS # 80909572. This was a really nice home on one of San Carlos’ premier streets.   Listed by Donna Colangelo of Intero Real Estate Services.

205 Lynton Avenue

• Sale Price: $999,777.  Original List Price: $1,275,000.  Difference: $275,223 (21.6%) below original list. DOM: 92 Days under current MLS # 80913872. Listed by Arnoldo Arreola of RE/MAX Star Properties.

177 Barford Avenue

• Sale Price: $825,000.  Original List Price: $849,000.  Difference: $24,000 (2.8%) below original list. DOM: 31 Days under current MLS # 80913872. This ultimately sold as an REO, but it originally listed back in April ‘08 at $1,198,000.  Listed by Kendra Wall of Vanguard Properties.

984 Alameda de las Pulgas

• Sale Price: $810,000.  Original List Price: $879,500.  Difference: $69,500 (7.9%) below original list. DOM: 36 Days under current MLS # 80921577. Listed by Michelle Despres of SC Properties.

2048 Brittan Avenue

• Sale Price: $760,000.  Original List Price: $789,000.  Difference: $29,000 (3.7%) below original list. DOM: 31 Days under current MLS # 80921491. Listed by Mehrandokht Abolmoluki of Coldwell Banker.

(Click this button to see all of the homes that have sold in San Carlos in the past 3 months.)

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Homes Pending Sale in San Carlos

Here’s a noteworthy pending sale from this week…

• 849 Elm Street went pending after only 1 day on the market

(Click this button to see all the homes that are Pending Sale in San Carlos.)

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New Listings in San Carlos

Below are the new listings that hit the market this past week in San Carlos. Click on the respective addresses to get all the details.  (Note:  If  a generic map comes up instead of a property profile, it likely means that particular home  is already Pending Sale.  Click the link in the “Homes Pending Sale” section to check.)

46 Elston Court, San Carlos

46 Elston Court

• Pictured Above:  $1,288,888 — 3BR/ 2.5BA, 1,826 sq ft on a 8,000 square foot lot.    MLS# 80931039, listed by Bente Palouda of Keller-Williams Cupertino.

2725 Clifford Avenue

• $1,268,000 — 3BR/ 2.5BA, 2,040 sq ft on a 10,400 square foot lot.    MLS# 80931039, listed by David Young of Coldwell Banker.

19 Camborne Avenue

• $1,245,950 — 4BR/ 2.5BA, 2,880 sq ft on a 14,200 square foot lot.    MLS# 80930035, listed by Donna Colangelo of Intero Real Estate Services.

2424 Melendy Drive

• $1,089,000 — 3BR/ 2BA, 1,870 sq ft on a 10,788 square foot lot.    MLS# 80930057, listed by Jeffrey Holley of CNA Equity Group.

938 Lupin Way

• $998,938 — 3BR/ 2BA, 1,950 sq ft on a 5,600 square foot lot.    MLS# 80930065, listed by Sue Walsh of Cashin Company.

3184 Brittan Avenue

• $975,000 – 4BR/ 2.5BA, 2,600 sq ft on a 14,204 square foot lot.    MLS# 80930042, listed by Mary Duvall of Coldwell Banker.

201 Molton Avenue

• $939,000 – 3BR/ 2BA, 1,600 sq ft on a 6,120 square foot lot.    MLS# 80931049, listed by David Young of Coldwell Banker.

849 Elm Street

• $649,000 – 3BR/ 1.5BA, 1,580 sq ft on a 7,200 square foot lot.    MLS# 80930034, listed by Justine Ford of RE/MAX Today.  This home is already pending sale after one day on the market.

(Click this button to see ALL of the homes currently for sale in San Carlos.)

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(The “San Carlos Week in Review” series is a summary of new listings and home sales in San Carlos for the prior week, and an occasional podcast mixed in to keep things lively. Between the two, you should get a great idea of what happened last week in San Carlos real estate.)

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Surprise Recognition.

I got a nice little surprise this morning while going through my emails —   The White Oaks Blog was just named one of the Best Real Estate Blogs in the San Francisco Area by Relocation.com, a leading publication that connects consumers who are moving with professionals who can best service their needs.    The editors of Relocation.com evaluated blogs throughout the Bay Area on such criteria as market data, explanatory articles about real estate, and local flavor and chose 7 blogs to share this honor.

Here’s the write-up on their site, as well as a press release from IT News Online:

Relocation.com:  The Best Real Estate Blogs in San Francisco

IT News Online Press Release

In great company…

This was really a surprise and quite an honor because there are so many good real estate blogs that cover the bay area right now.   The White Oaks Blog is humbled to share this honor with 6 other outstanding RE Blogs:

• The Front Steps :  Covering San Francisco real estate, created by Alexander Clark
• The Marin Real Estate Guide, by Ginger Wilcox.
• Absolutely Foster City Blog, (one of my favorite blogs) created by my colleague Jim Minkey.
• Living Well in San Mateo, from Raymond Stoklosa
• The San Mateo Real Estate Blog, by Vicki Moore
• The Marin Real Estate Blog, by Mark Lomas

Thank YOU.

Thanks to Relocation.com for the recognition and the nice write-up.  But a bigger thanks goes to all the readers of the White Oaks Blog.   Your continued readership, helpful suggestions, and overall encouragement were the real reasons behind this recognition.    The site is what it is because of you.

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San Carlos Inventory Analysis

There was a big swing in the active/pending ratios this week that was caused by two main factors.  First, the buying spree in the sub-$1M is showing no signs of abating — homes are selling far more quickly than they’re listing.  Consequently, there are now far more homes pending in this price range than there are homes for sale.    Secondly, there was an unusual surge of new listings in the higher price ranges.   At the end of the week, the overall ratio continues to creep closer to 1:1.   Pretty amazing.

Here’s a snapshot of the San Carlos market, as of 6/20. The previous week’s stats are in parentheses:

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San Carlos Home Sales

Below are homes that sold this past week in San Carlos. Click on the respective addresses to get all the details.

2172 Elizabeth Street, San Carlos

2172 Elizabeth Street

• Pictured Above — Sale Price: $1,265,000.  Original List Price: $1,279,000.  Difference: $14,000 (1.1%) below original list. DOM: 18 Days under current MLS # 80920186. Listed by Justine Ford of RE/MAX Today.

1339 Pebble Drive

• Sale Price: $1,135,000.  Original List Price: $1,148,000.  Difference: $13,000 (1.1%) below original list. DOM: 48 Days under current MLS # 80914513.  First listed in July ‘08 under a different brokerage at $1,698,000 (-33.2%). Listed by Molitor and Lunder of Intero Real Estate Services.

735 Orange Avenue

• Sale Price: $814,500.  Original List Price: $849,000.  Difference: $34,500 (4.0%) below original list. DOM: 48 Days under current MLS # 80922750. Listed by Mike and Sandy Rostad of Coldwell Banker.

(Click this button to see all of the homes that have sold in San Carlos in the past 3 months.)

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Homes Pending Sale in San Carlos

Here are some noteworthy pending sales from this week.

• 136 Windsor Court went pending after only 3 days on the market.
• 1201 Dayton Ave went pending after 64 days on the market.
• 2419 Graceland Ave is now pending sale after 87 days on the market

(Click this button to see all the homes that are Pending Sale in San Carlos.)

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New Listings in San Carlos

Below are the new listings that hit the market this past week in San Carlos. Click on the respective addresses to get all the details.  (Note:  If  a generic map comes up instead of a property profile, it likely means that particular home  is already Pending Sale.  Click the link in the “Homes Pending Sale” section to check.)

1578 Morse Boulevard, San Carlos

1578 Morse Boulevard

• Pictured Above:  $1,980,000– 4BR/3BA, 3,100 sq ft on a 6,000 square foot lot.    MLS# 80928884, listed by Shirley Kraus of Intero Real Estate Services.

169 Glasgow Lane

• $1,688,000– 4BR/3BA, 2,510 sq ft on a 7,481 square foot lot.    MLS# 80928872, listed by Mike and Sandy Rostad of Coldwell Banker.

1729 Elizabeth Street

• $1,475,000– 4BR/3BA, 2,754 sq ft on a 10,200 square foot lot.    MLS# 80929552, listed by David Young of Coldwell Banker.

10 Loma Lane

• $1,348,000– 4BR/3BA, 2,940 sq ft on a 10,800 square foot lot.    MLS# 80928913, listed by Debbie Lorell of Cashin Company.

2806 Roland Avenue

• $1,150,000– 4BR/2.5BA, 1,830 sq ft on a 5,395 square foot lot.    MLS# 80928898, listed by David Parks of Gateway Properties.

19 Whitman Court

• $979,000– 3BR/2BA, 1,760 sq ft on a 6,240 square foot lot.    MLS# 80929447, listed by Stanley Lo of Green Banker Realty.

136 Windsor Court

• $935,000– 4BR/2BA, 2,150 sq ft on a 9,400 square foot lot.    MLS# 80929748, listed by David Young of Coldwell Banker.  This home is already pending sale after just 3 days on the market.

133 Highland Avenue

• $899,000– 3BR/2.5BA, 1,760 sq ft on a 14,200 square foot lot.    MLS# 80929460, listed by Chet Lane of Prudential California Realty.

(Click this button to see ALL of the homes currently for sale in San Carlos.)

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(The “San Carlos Week in Review” series is a summary of new listings and home sales in San Carlos for the prior week, and an occasional podcast mixed in to keep things lively. Between the two, you should get a great idea of what happened last week in San Carlos real estate.)

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Once a “rubber stamp”.

It wasn’t too long ago that when you purchased a home, the appraisal seemed to be a mere formality.   The property condition contingency (property an pest inspection) was the one a buyer would fret over.   But once those were cleared, it was smooth sailing.  After all, since you need to be pre-approved in this market to have your offer seriously considered, the financing contingency is really  just getting the appraisal done, and then having an underwriter take a last look at the loan app.   A slam dunk, right?

An unwelcome surprise…

What buyers (and sellers) are finding out in this market is that getting the home to appraise at the sales price is NOT necessarily a given — no matter how great both sides think the price is — and that it can leave a real estate transaction in shambles.  When an appraisal comes in lower than the sales price, there are basically three options:

1. Come up with the difference.  To close the deal, the buyer would need to come up with the difference between the sale price and the appraised price in cash.   This can be a back-breaker for many buyers who have already scraped to cover their down payment and closing costs.
2. Renegotiate the sales price.    A buyer can ask the seller to lower the sales price to the appraised price (or something very close to it.)   Sometimes the seller will begrudgingly accept this reduction because they don’t want to go through the effort of putting the home back on the market.
3. Walk.   If the buyer specified a financing contingency in their contract (if you’re getting a loan to fund the purchase, you most likely did) then the buyer normally has the right to cancel the contract with a refund of their deposit if they can’t obtain a written loan commitment from the lender within the prescribed contingency time period.

Note that I didn’t include “get another appraisal” as an option.   Why is this?   Many banks won’t consider a second appraisal unless there was an egregious error in the first one — i.e. wrong square footage, sales price, bedroom count, etc..   Even if they do allow for a second appraisal, some underwriters will still opt for the lower (or “more conservative” number) anyway.   Finally, you always run the risk of having the second appraisal coming in lower than the first, which only makes a bad situation worse.

Why is this happening?

Aside from the obvious answer of “market conditions” there are two factors at play that are making a mountain out of what was once a mole-hill.

• New Appraisal Laws: Just a few weeks ago, the laws that govern appraisals were modified.  Financial institutions that previously used their own appraisers must now use independent appraisal companies, also known as Appraisal Management Companies, which aren’t affiliated with their institution.  The law also severely limits the communication that can take place between the loan agent (and Realtor) and the appraiser, so contesting a appraisal figure is nearly impossible.    And because mortgage broker is now essentially throwing the appraisal request “over the wall” there’s nothing that prevents the Appraisal Management Company from assigning an appraiser who happens to be an expert on Orinda real estate to appraise the value of your San Carlos home.
• Conservative approach.   Let’s not forget what caused the current housing fiasco in the first place:  Banks loaned money to people they really shouldn’t have on properties that were appraised at more than they should have been.    New, stringent loan qualifications take care of the former, and taking a conservative approach on home appraisals solves the latter.

Buyer (and Seller) Beware…

If you’re involved in a real estate contract in today’s market, regardless of which side of the table you’re on, you can no longer assume that the home will appraise at the sales price — even in lovely San Carlos.  This is even more relevant if you find yourself  in a multiple-offer scenario where the price is being pushed upward.

Be sure you have a back-up plan in case this happens.

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Did May have its Day?

By 2009 standards, May was actually a busy month for homes sales in San Carlos , although you’d never know it from looking at the numbers below.  But that’s to be expected, because the activity in May won’t reflect until the June or July reports.

While the number of closed escrows (aka sales) in May shown below is not terribly impressive, it was encouraging to see nearly 30 homes go pending last month.  It appears that home buyers took advantage of the low interest rates and depressed prices and jumped into the market en masse. After the buying flurry of May, the San Carlos market entered the month of June with a paltry inventory of ~ 50 homes for sale (consider that at the beginning of May there were 70!)

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General Trends

Here’s a graphical look at the monthly sales performance in San Carlos, dating back to last year.   See below for a more in-depth analysis.

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May ‘09 vs ‘08

Here’s the data from May ‘09 compared to the same month in 2008:

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YTD Sales Figures Through May ‘09

Here’s a snapshot of the unit sales to date in 2009, compared to previous years

And here’s the same data as above relative to the first five months of the year…

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Looking Ahead…

If the preliminary data is any indication, June ‘09 will give June ‘08  a run for the money, at least from the unit sales perspective.   There are already 8 home sales recorded in June ‘09, with around another 21 or so pending sales that are scheduled to close escrow this month — by comparison, there was a total of 30 home sales in June of 2008.  So June may be the first month of this entire year when the unit volume may actually match the prior year’s total.  We’ll just have to see…

But don’t expect a huge rebound in the average and median sales prices anytime soon.  Of the 21 or so homes due to close escrow this month, only 8 have list prices above $1M.   As in past months, the sub-$1M market still dominates the market in San Carlos.

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