I was looking to buy a home in the SF bay area, and this is what I have realized: You cannot afford a decent home if:
1. You have kids and want them to attend 900+ API schools.
2. You want a single family home.
3. You are the only earning member in the family. (making around $150k pa).
4. You are not one of those apple/google/IPO lottery winner..
On the flip side, the rents are also high. So, in a couple of years, may be, I'll start looking at other places in california/outside which is more middle class family friendly with good schools.
Ask yourself. The prices are up 15-20% compared to last year. And how much did the salary go up? (2-3%? if at all). Where is the affordability?
I cannot buy a home for $700k and afford sending my kids to private schools. However good the bay area is for different reasons, this place is just not affordable for middle class?
If you are looking at buyer agent options, I offer a free, no obligation buyer consultation to help you understand your own priorities, as well as the market. Just Call 408-252-8900.
P.S. My clients just closed today on a beautiful 2000-sf home on a quiet street in Evergreen Estates for $850K, so I know great values are possible.
It is a difficult, challenging time for first time home buyers and anyone wanting to "move up or move down". Potential sellers are afraid to sell for fear that won't be able to purchase their next home. And while there are some investors in the market place, there are many first time home buyers too. My advice would be two fold: be patient and trust your real estate agent to help you put together the strongest offer possible; and, expand your geographic area or "wants and needs" list. If you are not from San Jose, remember there are lots of other communities to consider as well.
Having lived throughout the SF Bay Area for the majority of my life, I'd be happy to share my thoughts on this with you.
Good luck, and stay patient!
I suggest as a first time home buyer, to buy what you can afford and which meets your needs.
Buyers have to know what is going on in the area they are trying to buy their home. The agent working for you should before hand k now what the comparables have sold for and the current listings in area are going for on the market.
Once you find a property you have to be ready to make a deal.It is a seller's market and the sellers are looking for the highest and best price for their property.
Remember, due to the geography of Silicon Valley, we naturally have a limited inventory of existing homes creating a natural imbalance between supply and demand to begin with. And with scarce new lands available for any major new housing developments, other than the current infill scattered throughout the valley, our inventory for the most part is dependent on the resale of existing homes which is currently around 50% of normal inventory levels.
So, what may be considered to be "overbidding" today could be seen as "a deal" in another few months. Compared to last summer, the "overbidding" in San Jose was close to 2-3% over asking price, while today we're seeing close between 10-15% or more...
If it makes financial sense for a prospective homebuyer to own versus renting, considering their monthly housing payments and out of pocket expenses, and the purchase will be for long-term holding, then what difference does it make in the long run if they paid an extra $10k, $20k, or more out of pocket...the same opportunities today are not guaranteed to be around tomorrow.
I know I'd rather lock in a housing payment for 30 years at a very low rate versus leaving myself open to the ever fluctuating rental market. And if it meant putting more down from savings, again what's the difference if my savings account is earning 0% anyways?
Sellers sensibly sell to the best (NOT ALWAYS HIGHEST) Bidder.
"Week" Buyers drop out of the game.
Rising prices bring out more Sellers.
Prices stabilize and a period of calm ensues.
After a variable amount of time (often years) the cycle begins again, either upward or downward.
If you choose to continue play then you need to be aware of all the options available to year during this phase of the cycle, including the Pro's and Con's of dropping out.
As you are competing most of the time with professional investors you need to know the rules they play under. You need professional help.
So it's not that you can't be in Evergreen, it's just that you can't be in the luxury homes neighborhoods!
The homes in the $725K to $799K range go quickly so you want to be available to offer the day they come on the market. You never know when a seller will say yes to the first offer -- bird in the hand.
Something else to think about -- sellers do tend to like to sell to someone who will love and take care of their home. So a snapshot of you and your family, and a story about why you want to live there, and how well you will care for the home -- will go a long way. All things being equal, many sellers will choose a family or a thoughtful presentation. Sellers don't always even know they will go for the family who cares about their house until they see the offers -- it is surprising how many will appreciate someone they believe will care about the house. It's just an emotional thing.
Now if you are a buyer investor, then I recommend you talk about how well you can maintain the home, and still put a personal touch on it. "When I walked in, I knew it was the house for me." I know that sounds mushy but it is something that often succeeds.
And mostly, find a great local real estate agent who would go out of her way to make the experience as seamless and pleasant for you and your family. I have been a resident of Evergreen, San Jose for many years. My children went to elementary, middle and high schools in Evergreen.
Call me at (408) 891-7978 or email me at firstname.lastname@example.org so I can help you get your dream home is Evergreen - a nice one for 800K. Also, check out my profile at http://www.trulia.com/profile/lynne_tran to see what my clients have to say about me.
Yes, we are currently in a seller's market. The Silicon Valley changed from a buyer's market where it was difficult to sell a house no matter how much you lowered the price to a seller's market where we have panic buying, multiple offers and overbids.
In this current buyer's market most of the buyers are people buying their own personal residences for owner occupancy. The investors have dropped out of the market because the prices have risen so much in the past year.
Fortunately we are not being played by the big guys. This is a real market with owner occupants dominating the market.
Unfortunately there are far more people who want to buy homes than there are homes for sale.
The large excess of buyers is what is driving up this market at such a frantic pace.
Yes, I agreed with you of the market. However, only about 30% of transactions are cash buyers. You need to be patient and find a great Realtor to work with. You can visit my website to review Evergreen Market Report and use 'Find A Home' to search for Active listings. This feature is connected to Pro-MLS.
Thanks and Best wishes,