Home Buying in 94306>Question Details

Sera, Home Buyer in 95131

455 ALDER LN, Palo Alto

Asked by Sera, 95131 Fri Jan 30, 2009

Is this a good buy for 1M. The price has been reduced so far by 222,590. Does it make sense to buy (1M) with enough down to bring montly payments to 3K (5% fixed). Any other advice is appreciated.

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I have been monitoring the PA house market for a while. In 2007 and most of 2008, you would Not see a SFH under 1 M no matter how bad location and condition the home is, very old, close to train/Alma, etc. However, since the Q4 of 2008, the momentum crashed as the other house market and as stocks in 2001. Right now, there are many asking for less than 1 M. On the high end side, similar stories as you pointed out to my last Oct's post. The prices are reduced again and again. But still on market.

Some of my friends bought homes when the prices started to dip after last Oct. Now they could buy a similar home with a price at least 0.1-0.3M decrease. With all the market news and no easy stock money, the PA house market will go down for a long time. When will it return to the 2007/2008 peak? No ones know. It may take 5~10 years until significant inflation comes (now deflation). NASDAQ was 5000 in 2001. Now it is 1500. When will NASDAQ return to 5000?

One thing is sure, for now, buy early, lose more. Just some idea. Some people in this forum always advise "It is a good time to buy a home." You can make your own judgment.

0 votes Thank Flag Link Fri Jan 30, 2009
MK, you're right on target. Even if Nasdaq and the economy rebound, lending is not going to become as loose as it was during the bubble. With the government exerting its will on the banks in the wake of the bailout and widespread realization that loose credit was the chief culprit in causing the recession, we just simply will not return to the days of liar loans, 0% down, interest-only loans, and so on. That alone means that buying power cannot return to the halcyon days of 2006-07.

But Nasdaq and the economy are not rebounding now. So prices will almost certainly drop further.
0 votes Thank Flag Link Thu Feb 5, 2009

Probably it's still to early, we will see.

One thing for sure, you should do is - never pay more than 20% down. Instead if you plan 50% down, do only 20% down, and put rest 30% in fixed CD. As long as you can find CD interest rate greater than 5% * 0.66 (assuming 33% tax bracket), you will be better off.
You will not only be saving money, but also will have access to the extra money in case something that happens.
0 votes Thank Flag Link Mon Feb 2, 2009
Thanks every one for your advice. I am in no hurry. I will wait to see what housing market does this year.
0 votes Thank Flag Link Mon Feb 2, 2009
It all depends. What are the comps, how many new homes are on the market? What else can you buy for the same price or for a one Million? Now that they have lowered the price, what is there competition?

For agents to tell you to low ball the price just for the sake of it, is not professional. Of course you want to get the best price possible, who doesn't? I want to buy low too.

Sera, you were wise to get advice from other agents. My advice is to get some comps, and work with a full time agent who knows the area well. Then, after doing your research, go for it. Maybe $1M is too much!!!

The key to negotiating is to come from a position of strengh, and you have a large down payment, so even if you do come in low, you should be able to get a counter offer.

If you need to talk strategy, give me a call.

Good luck,

Dave Tap Tapper
Cashin Company
Web Reference: http://www.Teamtapper.com
0 votes Thank Flag Link Fri Jan 30, 2009
Hi Sera,

I agree with Allyson about not offering full price in the current market. In regards to the monthly payment, this depends on the funds you have on hand. I typically suggest that clients put the minium down they need to, such that the monthly payment is affordable. It's better to have some money in the bank as opposed to it all tied up. You'll find the difference on the monthly payment is usually minimal.
0 votes Thank Flag Link Fri Jan 30, 2009
Hi Sera,
This is Allyson,445 Alder Ln, is priced at 1,199,900 I would not offer a full priced amount as I believe with the recent lay offs the high end areas will slow so I would price that in. It does make sense to have as low a monthly payment as possible. I would make sure the schools have all very good scores not just for yourself but it helps ALOT with resale value.
If you have any other questions or would like futher assistance please feel free to email or call.


0 votes Thank Flag Link Fri Jan 30, 2009
Sorry I forgot to mention that the current price is $1,199,900. Assuming the builder reduces the price.
0 votes Thank Flag Link Fri Jan 30, 2009
Hi Sera,

This is a great time to be purchasing a home. Interest rates are at historic low levels, and the feeling is that the bottom of the real estate market will be this spring. So, waiting is not going to buy you much more house for the dollar. The home on Alder is a great investment that will do well for you. 5% is a very competitive rate, most jumbos are 5.375%. It sounds like the builder is motiviated.

Earl Girbovan
Intero Real Estate
(650) 248-9255
0 votes Thank Flag Link Fri Jan 30, 2009
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