Property Q&A in Campbell>Question Details

Bjorn, Home Buyer in Campbell, CA

Uh if someone can afford to pay $6,604.38 a month for a home residence, why would they live here

Asked by Bjorn, Campbell, CA Mon Dec 1, 2008

And this is an 'average' sales price for this area. Over $800,000 for a tiny little home. Who in the world can afford $6,604.38 per month?? I make six figures and I live in an apartment! This town is crazy.
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Bjorn, Your question and comments were very interesting to read, as were the responses you've recieved.
The question is one that is being asked by many people who normally would consider buying. You've gotten a good number of the justifications for high prices they also would hear. What's interesting to me is that some of the justifications could also be the very reasons for these prices continuing to decline.

Supply and Demand...There is a huge supply now and it is growing larger, yet so far not the number of buyers to create anything approaching a demand. Most people think the prices will or should decline even more.

Price is determined by the buyer...Isn't that what is happening now as buyers sit on the sidelines waiting for housing to become affordable for them..

Patience is virtue...For the buyer that couldn't be more true than it is now. We are at the beginning of the recession, not the end, the fact is prices are still declining and warnings of missing the bottom are premature at best..

American Dream...Overpriced property, upside down mortgages, foreclosures, people fearing the effect of the economy on their jobs or retirement ect...???

Who's is to blame?...It's the banks, it's the CEO, the goverment, loan brokers, bank lenders, greedy lying consumers, re agents, the media, kindergarden field trips and daylight savings, ignorant consumers..Take your pick, everybody has someone to blame, and yet each group when asked had nothing to do with was something else..

What you asked and have said is something I am hearing in conversation every day. More people seem to be becoming more angry and less tolerant of generic responses each passing day, as someone else they know is foreclosed on, their small business goes under, the investment in property they were told every smart person makes declines in value, entire neighborhoods fill with for sale signs,and food banks see growing lines...

This isn't to suggest that there are not buyers for this market and yes, there will be a good number of people who get exactly the perfect deal for them..But to suggest that it's a great time to buy for everyone and warnings of missing the bottom if you don't buy now are IMHO just not true..Read thru the Q&A the same people were giving the same responses a year ago, six months ago, three months ago, they were WRONG then and they are wrong now..Do you really think the economic situation in California is near being fixed? Do you really believe we are close to the economy being fixed anywhere?
People like you (and I believe you are in the majority) will be the ones who finally decide what the market will be for all the reasons given to you in the answers you got. People like you will decide which agents to use and the RE industry will be shaped by the decisions of future consumers, not the wishful thinking of some..

Your question is being asked by many, even if the number isnt $6,604.83 or $800,000. It's being asked about prices and expenses across the board..
Please continue to ask, and remember your opinion is worth just as much as anyones in this Q&A about this topic..Yes some people may be able to pay those prices, but not many can...

Hope to see you around, Dunes
1 vote Thank Flag Link Sun Jan 4, 2009
This line of thinking along with the massive credit bubble got us into this place to begin with. Is the ultimate goal to purchase a home and hope someone else will get into more debt in order to pay a higher a price so that equity increases through leverage and then i can take a loan based on increased equity and use it consumer it on other products???? Economic expansion that is generated through increased debt and inflated asset prices is not sustainable; when one cannot find another fool to increase credit the whole ponzi scheme dies. A lot of the brokers are living off unprecedented credit booms and will soon find out what happens when leverage is being taken out of the system and we go back to a system where people are saving and living within their means. Good luck!

"You might say to yourself that no one in their right mind would spend that much to own a $850,000 home...why not rent? Well, should that $850,000 home appreciate just 5% in one year, you as the owner can expect your equity to increase by 25%!! In this situation, if your home appreciates just 1.4% your equity will increase at least 7%.

Talk about a safe and very lucrative investment. If you think of your loan payments as "rent", you increase your equity from the bottom end as well and the principal you pay every month can be recouped when you sell the home, unlike rent which disappears forever. "
3 votes Thank Flag Link Fri Dec 12, 2008
Bjorn- you're finally seeing the light. Also, always think twice when you're getting advice from someone whose interest is to sell a house and gets paid as a percentage of the transaction. The next couple of years will be hell for a lot of realtors, and well, after decades of prosperity they deserve what is coming, not to mention ruining so many people's lifestyles.
1 vote Thank Flag Link Thu Jan 15, 2009
I used a mortgage calculator I found online using the interest rate it recommended. There's no way I would pay $800k for a house that small. There's no way I would risk my future on the empty promises that home prices will continue to rise the point I can use the home's equity to fun my kids education. You people live in a dreamworld. I'm not looking for an investment and I'm not looking for investment advice from someone selling homes. Advice such as yours as ruined the lives of millions of Americans. I feel sorry for the people who listen to your promises of rising home values. I don't feel sorry for people who think that a home can be turned into cash. All these terrible things happening across the country and you people are still singing the same song.

Anyhow. Homes in Fremont are now around 300k-400k, selling at values LESS than what they sold for in 2002, at the same size as the one I linked to here. So we're looking there.
1 vote Thank Flag Link Thu Jan 15, 2009
If I could afford $6,600 a month I could buy new laptop every other week. i could afford to buy like 3 or 4 new cars a year. I could afford to buy my wife fendi handbags every month or take trips to the bahamas for the weekends sometimes. I could afford to start several small businesses every other year. I could donate that money to oxfam and save hundreds of lives per month.


I could pay for a tiny little house a block away from a noisy expressway.

The prices are crazy. They can't possibly stay this way, because I can't possibly see how so many people in this town could possibly be making enough to afford $6,600 a month payments. Is every home owner in Campbell a star corporate lawyer? Many of the cars I see parked in these driveways are older and cheaper than mine. Instead of renting a nice place and buying a masarati, they own a tiny little house in a crappy little neighborhood.
1 vote Thank Flag Link Sun Jan 4, 2009
You're living in the past and obviously haven't been forced to deal with the new realities that are facing us.

"The housing market is still one of the safest investment you can make, and the tax write offs make this desirable for most needing the write off, due to a good paying job. "
1 vote Thank Flag Link Sun Dec 28, 2008
The simple answer is that this is crazy and these prices were only possible because of a tremendous credit bubble the likes of which the world had never seen before. The lax lending practices that you read about for subprime impacted the prime borrower market just as much and the tsunami of home price declines is headed this way as the Option ARM wave is about to hit in 09-10. To Matthew the real estate agent, I would just say that I am very sorry that things turned out for you the way they have - you spend your days trying to convince people to take on debt levels that on any objective measure are absurd, even though you probably know in your heart of hearts that you are doing these people a great disservice. Even the most rah-rah agents now realize (but won't admit) that massive price declines are on their way to this area (yes, even the fortress) just as they have come to other areas. Here's to hoping that the next generation can show some sense and create some type of fiduciary responsibility aspect to real estate transactions rather than having a bunch of shills run around duping people. I weep for our nation.
1 vote Thank Flag Link Tue Dec 2, 2008
Hello Bjorn,
Even though it IS crazy, there is a simple explanation for it.... Supply and Demand. As long as there are buyers willing to pay these prices this will remain to be the case.
There are single family homes in Campbell in the $500K range, see Perhaps you'll find something you can live in within your means

Ali Moein
1 vote Thank Flag Link Mon Dec 1, 2008
There is a pocket in 95127 that is 3 bedroom 2 baths that are going for around 300K, also the high school in this area is API scores of 800.
Unless you really want to be in Fremont, this may be another choice.
Denise Stuart Coldwell Banker
0 votes Thank Flag Link Fri Jan 16, 2009
Thank-you Bjorn I hope to see you around the forum...

0 votes Thank Flag Link Fri Jan 16, 2009
Hi Bjorn:
Where did the $6,604.38 come from!! What interest rate are you talking about!
I am selling a yown house in Los Gatos at the same price and after the 20% down payment the monthly payment could be as low as $3050.00
The rent on this town house is $3500.
Check with different lender.
By the way the computers you can buy every other weeks will ve worthless in 10 years! but your house might pay for your kids college!
Happy New Year
0 votes Thank Flag Link Tue Jan 13, 2009
Hello Bjorn,
Here is the generic answer to home buying.
People of all walks:
Poor vs. Rich.
Born here vs. transfered here.
It is called the american dream because this is in fact is the ultimate payoff.
At least for those with family that children have seen for years buying low and selling high or the wealth of the family in many cases was the rental homes.
My family bought homes and kept them in the family and via transfer my Mother and step father are living a very comfortable life due to investments made during down real estate markets. Even if you choose not to live in an area, but the home prices are low, some choose to have the fall back of rental property and still choose to rent themselves. The housing market is still one of the safest investment you can make, and the tax write offs make this desirable for most needing the write off, due to a good paying job.
Give me a call if I can help.
Denise Stuart
Coldwell Banker
0 votes Thank Flag Link Sun Dec 21, 2008

Patience is a virtue...

Find a broker who is find the deal right for you.. they are out there..
0 votes Thank Flag Link Mon Dec 1, 2008
I'm thinking that maybe it's an injustice that wealthy people can use their bigger pocketbooks to make homeownership less affordable for other hardworking Americans. Supply and demand might make sense when you're talking about widgets and doodads, but not when it comes to homeownership.
0 votes Thank Flag Link Mon Dec 1, 2008
Price is determined by the buyer.......If this home is over priced it will not sell and the price will eventually drop to a level where a buyer will be found.

There is obviously desirability or the home would not be priced as it is......time will tell.

If you owned the home, would you consider listing it for $399,000? I believe we know the answer.......
0 votes Thank Flag Link Mon Dec 1, 2008
There is a home for everyone and it's value is what someone is willing to pay for it. Whether it is town, city or style, if it is desired it will always be worth more than those less desired.
Web Reference:
0 votes Thank Flag Link Mon Dec 1, 2008
Bjorn... come on down to Sunny Southern California and see what you can buy for $800K down here...
0 votes Thank Flag Link Mon Dec 1, 2008
There are many luxury communities here in the USA people want to live there. Based on many reasons for professional and personal lifestyle, schools, low crime rate, luxury accomendations, tax advantages, location, views, all come into play when a person makes a decision on type of home and mortgage of their preferences. Amazes me to as a realtor.
Web Reference:
0 votes Thank Flag Link Mon Dec 1, 2008
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