Real estate is a year-round proposition. In fact, some agents swear they do their best business in December when the market has cleared of casual observers and is populated only by hard-cores ready to deal. Fewer agents insist they clean up in August, taking advantage of a market heavy on relocated families looking to get into a home before school starts.
However successful these off-calendar periods may be for some, most Realtors count on two stretches each year, during which they do the majority of their annual business. One period comes in the fall, after everyone’s returned from their vacations, started school and settled in. From September to Thanksgiving, activity and inventory peak.
The other busy time of the year is spring, which begins in February, right after the Super Bowl. Ignore the snow on Mount Diablo. Real estate is powerful, but it cannot control the weather.
Why the Super Bowl? Why not March Madness, which begins in two weeks? Aren’t agents worried that clients will blow their downpayments on office pools?
The only real impact March Madness has on real estate involves open houses. That Realtor you see peering at his Blackberry isn’t texting; he’s checking out the score of Duke-Syracuse. Otherwise, the NCAA men’s basketball championships have little impact. By the time they roll around, Realtors are already six weeks into their first busy season.
The Super Bowl caps a month – followed the holidays – of Sunday morning and afternoon NFL playoff games. Good luck with your open houses in January.
In Foster City, where a “normal” month sees anywhere from 30 to 50 active real estate listings, February has traditionally meant an inventory increase of approximately 10 – 20 percent, even in 2009, when the market was all but frozen solid. Says Realtor Lenore Wilkas, who, along with her husband Alex, publishes a Foster City-centric real estate blog,“2009 was a horrible year,” she recalls. “There wasn’t much going on.”
This year, Wilkas says, things are different. Countywide, dozens of new listings appear on the MLS every day. As of March 3, there were 66 active Foster City listings, 24 single-family homes and 42 condominiums.
But will it translate to sales? SAMCAR, the San Mateo County Association of Realtors, just released sales figures from February. For the month, only two homes changed hands in Foster City, despite a 12 percent increase in inventory. Average sale price -- $862,250 for February – was also down month-over-month. January’s number was $962,000. There were seven sales in Foster City that month.
That disturbing news is that January’s numbers were down from December, when the average Foster City home sold for $1.003 million. Total sales were also down, to seven, a decrease of 36%.
Despite January and February’s down numbers, word on the street still says that the next three months will show a positive change in the local market. How the industry, home buyers and sellers respond will determine whether recovery will continue or whether it will see its shadow and disappear for another year. With the first two months of the year in mind, Realtors (and sellers) are hoping March, April and May show a market resurgence.
Something like that happened last summer, when a 16-month period of slow, sustained local growth suddenly disappeared.
“It comes down to confidence,” Wilkas says. “People get skittish, and frankly pay too much attention to what the press has to say.”
Since the start of the real estate crisis, some have suggested, the market has responded to the media, rather than the other way around.
Three good months don’t mean it’s 2005 again, especially when followed by two that are down. As Wilkas points out, “the pool of people able to qualify for (large) loans is still pretty small.”
It is easier to get a loan today than it was 18 months ago, but you still can’t walk in without a W-2 and expect to get 100 percent financing for a million-dollar home. And speaking of loans, don’t expect the present bounty of suppressed interest rates to continue much longer. As the economy improves, the need to keep rates artificially low lessens. Anyone waiting around for a “double-dip” might want to consider buying now, as whatever gain they might get from a decrease in property values will be erased by increased interest rates. Considering that Foster City is only 15 percent off its five-year high for home prices – and years away from any sort of significant inventory bump – prospective buyers waiting for a new “bottom of the market” might want to wait for Godot as well. Either one is as likely as the other to show.
Check back again in June. The events of the next few months contain all the clues we’ll need to determine Foster City’s long-term real estate health.