Home Buying in San Jose>Question Details

Bryan Silva, Home Buyer in Santa Clara, CA

When is the right time to buy?

Asked by Bryan Silva, Santa Clara, CA Tue Jul 31, 2012

I'm looking to buy my first house in the San Jose / south bay area. When is the right time to buy? Should I wait until 2013 when more foreclosures hit the market? The market has recently started to take off with low supply and I am wondering if I run the risk of over paying in the current market.

Help the community by answering this question:


Trying to time the market is a risky strategy. The only sure way to know the perfect time is after that time has passed. Rather than focus on external issues, ask if you are ready to be a home owner with all the rights, privileges and responsibilities involved. When you think you are ready find two quality professionals to help, a great lender and great Realtor.
Until you are ready, save some money, learn about the process and get your credit well positioned for a mortgage.
2 votes Thank Flag Link Tue Jul 31, 2012
Is it the right time for you? I assume that you are going to live in this house. Is it the right area for you? What is your price range? How stable is your financial situation? What is your family status and how many people do you have to accommodate and support?

I am sure it's impossible to time the purchase to the market and I would not target short sales/foreclosures exclusively. There are good deals to be had at any time and only time will show you how good of a deal it was. Look at your personal situation and decide.
Web Reference: http://talisrealestate.com
1 vote Thank Flag Link Sun Aug 5, 2012
The best time to buy is before property prices surge.

The right time to buy is when you're financially and personally ready for the purchase commitment.

No, you should not wait on the expectation of more foreclosures. You should be looking now with a target of buying something in 4-5 months. You may get to buy a house with slightly less competition in that time and maybe get something for 5% less than you would otherwise have to bid, even if that means you may still pay higher than today.

The bay area housing market took off 7 months ago and hasn't looked back. There's no risk of overpaying in a free-market economy. You always pay the full market price that balances what the seller is willing to accept and what others are willing to pay. (Home prices are never "low", that's a kindergarten concept of economics. Similarly, as interest rates are going lower, would you call today's rates "low" in 6 months?) You only overpay if there's some form of fraud to mislead you on the condition of the property.

Prices are going to continue to move higher as low inventories slowly work off high demand.
Web Reference: http://www.archershomes.com
1 vote Thank Flag Link Sun Aug 5, 2012
As the other realtors have pointed out it is tough to predict the market. Here is my advice to you, I would not wait to get started I would be checking out loans and what I could afford. At the same time I would be checking out areas that I feel would be good for my money,family. If you don't know the areas get a realtor who does. There are quite a few of the best realtors in the bay area right here at your finger tips on Trulia. Go over the profiles of a few of us and contact the one(s) you feel would represent you well. With that said you can talk or email with your agent on which areas would be the best fit with your criteria and finances. I would then keep track of those areas and when you see a home thats right for you go for it. The reason I say this is interest rates are low, and banks are finally figuring out that short sales saves them more money than foreclosures so I don't see a big dump of foreclosed properties in the coming year.
Feel free to contact me I would be happy to assist you.
At your service,
Certified Distressed Property Expert
1 vote Thank Flag Link Tue Jul 31, 2012
Hello Bryan,
If you are actually ready and qualified to buy you are past the stage of gathering information from this forum, although it can still be helpful in chosen a Realtor tho work with.
You now need a partner to guide you through the buying process as it exists here in Silicon Valley, a unique market where prices bottomed out about 9 months ago and are moving steadly upward especialy at the low end i.e. $350k to $600k for a 3/4 bed, 2 bath home.
Your reference to more foreclosures coming seems to refer to the urban legend of the "Shadow Inventory" which has been coming now for 4 years and has still not arrived.
Current programs from major holders of foreclosed properties are removing many of them from the foreclosure inventory by selling large numbers of such properties en masse to larg,e bottom fishing investment pools to be converted to rentals.
Finally, give serious consideration whether interest rate will still be at current fantastic levels when you decide to make your move.
Good luck,
1 vote Thank Flag Link Tue Jul 31, 2012
Good question, and one that is frequently asked. Timing the market is incredibly hard and even the experts get it wrong more often than not.

You may not looking for an answer like this...but honestly, the right time to buy is the one that is right for you and your family. Right now, we are seeing the lowest prices and lowest interest rates we've seen in a decade...but it you are unemployed or self employed, you will find it difficult to get a mortgage.

On the other hand, in a few years,your kids may be entering school and at that point, you will likely care about getting into a good school district.

Predicting the future is challenging quest - instead, I encourage you to look inward and the reasons you want to buy. In every family's life there are typically life cycles that trigger the buying decision. These are events that should dictate your home purchase...

Good luck.
1 vote Thank Flag Link Tue Jul 31, 2012
NOW! But no later than the November elections?
0 votes Thank Flag Link Mon Aug 6, 2012
The right to buy is a very personal decision. I advise the right time to buy is when you are financially secure in your job and income, you are ready to lock in your monthly housing cost, you have the down payment and credit scores needed (if you are financing vs paying cash), you can afford the home you have decided to purchase.

The Buyers today are making the prices of tomorrow. With those cash and multiple offers, it is increasing the housing price. If the low inventory continues to drop or stay the same then prices will trend upwards. Our interest rates have been staying below 4% and that is very good for Buyers to qualify.

If our interest rates rise by 1% that equates roughly to a 10% hit to buyers. Either in qualifying or paying more.

It is a risk in over paying when there is a frenzy of buyers. We saw this when the market continued to appreciate. Interest rates are affect by the supply of funds. When you start to see interest rates raise then expect to see a tightening on the funds - indicating investors are concerned about the market.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Mon Aug 6, 2012
Hi Bryan Silva

Your real concern should be - Will the interest rates remain this low?
There may be the chance of that shadow inventory everyone worries
about might exist. It probably does elsewhere in places like the
central valley bedroom communities where long commutes exist.
This is Silicon Valley, this where the jobs are. Our local economy
seems to be improving. True, the prices here have started to edge back up
due to the low inventory and the high demand. The time to buy
was yesterday. This Spring prices have started to creep back up.
I suggest you hurry before rates start climbing too. Please feel free
to give me a call to discuss this further (408) 605-4122.

I have 25+ years real estate sales and appraisal experience.

Ron Kooyman
Better Homes & Gardens Ventura Barnett
Email Ron@KooymanTeam.com
Website http://www.MoveChangeGrow.com
Direct Line (408) 605-4122
0 votes Thank Flag Link Mon Aug 6, 2012
NOW ... NOW ... NOW ... NOW ... NOW ... NOW and NOWWWWW !!!!
0 votes Thank Flag Link Sun Aug 5, 2012
That is always a very tough call. No one knows for sure more foreclosures will be coming or what will happen with supply prices. During spring 2010 during the tax credit there were multiple offers and rising prices, it turned out to be the CORRECT decision to hold off to buy until after the tax credit expired. After the tax credit expired prices dropped 10-15% in many areas of CA. Spring of 2010 was a false positive. As for right now? Who knows. It is a very tough call. But if you find a house you like, for a payment you can afford and you plan to stay there at least 5 years, it may be OK to just go now. So even if we did see a dip in 2013 you would be fine since you don't plan to sell immediately.
0 votes Thank Flag Link Sun Aug 5, 2012
Hi Bryan,

As you remarked, many locations are experiencing shortages of real estate inventory which is a good indication that the real estate market is rebounding. In addition to lower inventories we are seeing both asking and sale prices on a gradual rise, also a strong indicator of a recovering market.

Many others like you, have been waiting for that "second wave" of foreclosures....one year, two years.....The reality is there may never be a wave to the extent we have already experienced. This is because banks are dealing with their distressed inventory by other means. They have finally accepted the "short sale" as a viable means of reducing their liability. They are also cutting into this inventory by wholesaling large blocks of of homes to investor groups.

With this said, waiting to make a purchase based on an increased inventory of foreclosed home may not be a sound approach. There will be additional foreclosure entering the market but it remains to be seen to what extent this will benefit future buyers.

Buying a home should be based on an individual's needs and their means.....get into the hunt not....you never know. The perfect home, in the ideal location, being offered at a price you can't resist may be out there waiting for you.

Best wishes,

0 votes Thank Flag Link Sun Aug 5, 2012
One there is no "right time" per se, if you're trying to time the market, take my word for it you can't.

As for buying foreclosures, I would strongly advise you to proceed with care, I've been helping buyers purchase foreclosure properties for over twenty years, despite advising against it for the simple reason that rarely are they as good a deal as my clients think they are. I've attached a link below to one of my more popular blog posts here on Trulia about Foreclosure sales.

Secondly if your following real estate news, you'll know that the market is going up in most parts of the country already and while I can't predict what may happen in any specific market my guess is that this time next year prices will likely be up where you're looking. Stop worrying about whether prices may go up on down, markets go up and down all the time. If you'r e buying to occupy the property what you should be considering is how much you'll waste in rent between now and some undefined time in the future.If you're buying as an investment it's even easier; either the numbers work or they don't.

Best of luck to you.
0 votes Thank Flag Link Sun Aug 5, 2012
Thank you for your question, Bryan:

You should buy your home as soon as possible. Real Estate Prices are still artificially depressed, and there is an enormous amount of pent up demand from the last few years as many people who wanted to get their first homes sat on the sidelines waiting for the market to go down. We are in the early stages of the recovery in Real Estate Prices.

Also, rents are rising rapidly, forcing large numbers of former renters into the Real Estate market to buy their first homes.

Also, interest rates are the lowest that they have been in over 60 years. Interest rates have no place to go but up. Right now you can lock in a 30 year fixed rate mortgage at less than 4%. You will have your housing cost fixed for 30 years.

Rents will be much higher in the future, interest rates and housing costs will be much higher in the future. If you get your home now, with a 30 year fixed rate mortgage, over the years, you will be able to look back on that as the best decision that you ever made because your housing costs will be fixed far below the market cost of rents and mortgages as the years go by.

Real Estate prices will not be lower in 2013, they will be higher. If you wait , hoping for lower Real Estate Prices in 2013 you will be very disappointed. The stories of low supply are a myth. What has happened is that large numbers of people who had been sitting on the sidelines are now beginning to jump into the market and rapidly buying up the existing supply and the new listings as soon as they come on to the market.

You do not run the risk of overpaying, as Real Estate Prices are still very low.

Your biggest risk is getting left behind without a house as both Real Estate Prices and Rents go much higher.
0 votes Thank Flag Link Tue Jul 31, 2012
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