Home Buying in 94568>Question Details

Vikas Dharia, Home Buyer in San Jose, CA

Is the decision on Fiscal Cliff going to drive the housing market in Bay Area down ?

Asked by Vikas Dharia, San Jose, CA Mon Dec 3, 2012

The Key Indicators (Sales, Manufacturing and Consumer Spending) are either going south or are completely stalled. The only silver lining is the Job Growth (but that factor is very volatile). Also Prices in some areas have inflated more that 20% y-o-y. Is this a pattern of a bubble growth ? I am interested in buying a home in Dublin CA area but the possibility of another slow (recessive) economy is holding me back.

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To be honest, no one really knows. In reality, the current boom in the Bay Area is not economy driven – it’s being fueled by the extreme lack of inventory. We’re seeing prices shooting up and seeing multiple offers on absolutely everything out there right now. Since our current market frenzy is not driven by the economy, we have no idea how this will be affected should the cliff actually occur.

We can speculate and pontificate at length … but we really don’t know for sure.

Here are some posts that may be helpful:

Sellers’ Market Goes ‘Insane’
http://ebpublishing.com/index.php?option=com_content&vie…

Midwest Drought Mirrors Current Housing Market
http://ebpublishing.com/index.php?option=com_content&vie…
0 votes Thank Flag Link Mon Dec 3, 2012
Thanks Carl, In this case, would it be Wise to Wait on Purchase upon Fiscal Cliff Resolution (till Jan 2nd 2013) and if it turns out that Bay Area Economy is completely decoupled from national economy then the uptick would be based on economic factors in the valley.
Flag Mon Dec 3, 2012
Dear Vikas:

It would be wonderful if real estate agents could predict the future! The other responses are good ones...the current "growth" in the housing market is mostly driven by low supply, and low interest rates. How long these conditions will continue can only be speculated upon.

My questions for you: what motivates you to buy a home now? Will you be living in the home for the foreseeable future? Is it an investment? Will you be living in the home or renting it? How will you be financing this purchase? Your answers to these types of questions may be a better indicator on the best time for you to make this purchase.

All my best to you!

Sally Blaze
Alain Pinel Realtors
DRE 01856137
925-998-1284
sblaze@apr.com
0 votes Thank Flag Link Wed Dec 5, 2012
My ANSWERs for you:
what motivates you to buy a home now? I sold my house last week and moved to a rental with the anticipation of buying an SFH before my family grows
Will you be living in the home for the foreseeable future? Yes,atleast 10-15 years
Is it an investment? Primary Residence Mostly, but as age closes to retirement it might be flipeed to investement asset

Will you be living in the home or renting it? Primary Residence
How will you be financing this purchase? 10% Down rest with a 90% PMI Buy out loan.
Flag Wed Dec 5, 2012
I agree with the others. It's all about supply and demand. Very little supply (sellers) and lots of demand (buyers) are way more important than those other 'key indicators'.

When will the market go down? When there's more sellers than buyers. Just don't see that happening anytime soon - bigger problem IMO for you is competing with cash investors who can get better returns in real estate right now than in the stock market.
0 votes Thank Flag Link Mon Dec 3, 2012
Regarding bubble growth pattern, my simple answer would have to be: no.

One of the biggest factors in the most recent housing bubble (which has caused nearly our whole economy to burst): was ridiculously low standards in the housing finance market.

Where are the buyers coming from in this current market? A HUGE percentage are all-cash buyers. In some local areas, they represent 50% of the market. The balance are obtaining financing with Conventional and FHA financing.

Those obtaining loans now are going through a RIGOROUS underwriting obstacle course. Just ask any buyer who's purchase a home with a loan in the past 3 years. And it looks took get even more stringent next year.

As Carl states below, the lack of inventory is also a major component of the current boom.

I wrote a brief article about the market back in August (see post below), and summed it up with my outlook to the future....
0 votes Thank Flag Link Mon Dec 3, 2012
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