Home Buying in Evergreen>Question Details

Sdk Talent, Home Buyer in San Jose, Jacksonville...

Clean history perfect credit score pre-appr $800K but can't find decent homes in Evergreen, San Jose. Not disappointed but worried abt

Asked by Sdk Talent, San Jose, Jacksonville, FL Tue Apr 9, 2013

overbidding Looking at the way houses are being snapped up by the investors, cash buyers, china money & controlled inventory makes me feel we are being played by the big guys again. I understand the local dynamics for this rise but still unclear how natural this quick ascend of home prices. Am i being too worried/paranoid or prudent first time home buyer with patience/common sense?

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The bay area is a weird market. Honestly, the supply and demand is driving up the price. (Herd mentality?) But, is there a value? Hell no, in most places.
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?
2 votes Thank Flag Link Thu Apr 11, 2013
There is a great little home at 2900 La Jolla in Cambrian for $699K you may find is a match for your needs.
Flag Thu Sep 12, 2013
Please don't let the negative thought consume your desire to find your dream home. I would recommend an open discussion with a competent real estate agent about your expectation and the current conditions of the Bay Area real estate market. Things are getting back to be more "normal". Buying a home is a big investment that affects you and your family for years. Ask yourself a few questions first: 1. What is a decent single family home? 2. What is the cost of sending your children to private schools in the Bay Area? 3. What is your true budget? 4. What is the most important factor - house or children education? Or both?

There is a will, there is a way. I can help you assess your current situation in light of the bay area market and help you find a "decent" home for 700K. Please call me at 408-891-7978 or email me at ltran@interorealestate.com.
Flag Wed Sep 11, 2013
Here are a couple of posts you really need to read:

Current Bay Area Market NOT A Bubble: Top 5 Buyer Recommendations
http://bit.ly/1460Yzt

Tough Year Ahead: Top 10 Issues Facing Bay Area Buyers
http://bit.ly/W6J2zc
2 votes Thank Flag Link Tue Apr 9, 2013
What is your buyer agent advising you on this topic? Or are you still looking for someone? I can tell you the next few months are likely to be "your time to buy". Some buyers will take themselves out of the market. However, don't expect the prices to be dropping, more like softening. However that could make an $850K home become an $800K home.

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.
1 vote Thank Flag Link Thu Sep 12, 2013
You are right being prudent. However my take on the market is that event if we are entering another real estate bubble, we are only at the beginning of it. I would not expect the prices to go below current levels when we hit the next bump. But what do I know...
Web Reference: http://talisrealestate.com
1 vote Thank Flag Link Tue Apr 9, 2013
Dear SDK Talent,
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!

Sally Blaze
1 vote Thank Flag Link Tue Apr 9, 2013
Interest rates are the lowest they have ever been. Let's look at a scenario, if interest rates go up 1% it's going to cost you 10% more. With prices increasing now, and analyst from economist believe we will see 10-15% increase again for the next year. With that waiting may put your out of the market.

I suggest as a first time home buyer, to buy what you can afford and which meets your needs.
Web Reference: http://www.terrivellios.com
1 vote Thank Flag Link Tue Apr 9, 2013
I have been in the business for over 44 years and have never seen a market this crazy.I went through a copy of markets like this before were prices going through the roof. My son Robbie has written eight offers on homes for clients in the last week and was out bid on almost all them.

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.
1 vote Thank Flag Link Tue Apr 9, 2013
Welcome to the housing recovery...sustainable appreciation for the short term is likely especially given the continual scarce inventory available for sale, the current increased affordability, and incredibly low interest rates. And as long as housing affordability remains at it's current levels, and potential homebuyers will prefer to own rather then rent, I don't think we're going to see a slow down.

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?
1 vote Thank Flag Link Tue Apr 9, 2013
It really is a shame in many of places in America right now how hard it is for a normal working family to find a home.
1 vote Thank Flag Link Tue Apr 9, 2013
This is the Free Market in it's most perfect form. Housing is a Commodity where there is currently more Demand than Supply. (At least in Silicon Valley)
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.
Good luck
Bill
1 vote Thank Flag Link Tue Apr 9, 2013
To get a home at the $800K offer point you want to be looking in the $725K to $790K range and offer over asking. These homes from what I am looking at are near Aborn/San Felipe/Murillo/Ruby and won't be the country club homes with the views. The country club homes (higher elevation) start around $1.3 and go to about $4M with many in the $1.6M to $2.2M range. I toured a beautiful five bedroom home $1.6M on the weekend.

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.
Good luck!

Erica
0 votes Thank Flag Link Tue Apr 8, 2014
Apparently there is a shortage of inventory all over the country(not so much in Pa depending on the area). You are not overpaying, it's the simple law of supply and demand. People are able to get higher prices because there is simple nothing out there to buy! One option you have is to get a good realtor, and have him search around his database. He may know of some pocket listings or homes that are not yet on the market. He may also know of an investor he has worked with before, that has bought a property that has risen in value, and they can get a great ROI. That would give them incentive to sell if there realtor convinces them, and it is not their primary residence. You could also get a fixer upper below your price range, and bring it to where you want it to be. Those are my suggestions.
0 votes Thank Flag Link Sat Oct 5, 2013
Many of the concerns you list seem to be more the products of media hype or misinformation than real factors affecting the local Evergreen real estate market. Look at the positive side first. You are an absolutely well qualified buyer that any seller would want, if you are represented by a competent real estate agent. Keep your mind focused on searching for your dream home: what it would look like, where it would be, what schools it belongs to, etc. , focus on factors that affect your lifestyle and your family in your search for a new home.

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 ltran@interorealestate.com 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.
0 votes Thank Flag Link Wed Sep 11, 2013
Thank you for your question:

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.
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0 votes Thank Flag Link Tue Apr 9, 2013
Hi Sdk Talent,
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.
Http://lamsondang.com
Thanks and Best wishes,
LAMSON
Web Reference: http://lamsondang.com
0 votes Thank Flag Link Tue Apr 9, 2013
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