Is it worth waiting to buy a single-family home instead of buying a townhome in Rivermark?

Asked by cr1000, Santa Clara, CA Thu Mar 6, 2014

We have money for (20%) downpayment enough only for a townhome in Rivermark. Is it ok to wait for a couple of years and buy a home in places like Cupertino, Los Gatos where there are good schools? Or, is it better to buy the townhome now and move out in 3-5 yrs?

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Karen Howard, Agent, Sunnyvale, CA
Thu Mar 6, 2014
It depends on your short term/long term goals. Some families are very comfortable living in a townhome. Others look at it as a stepping stone towards a single family home with a larger yard area. If you wait a few more years, you may have saved additional down payment. However, do you know what will happen to real estate prices? Most are unable to make that kind of a prediction. Are you renting now? Has your tax advisor discussed tax advantages of home ownership vs renting? Some families are able to purchase a townhome and then eventually keep it as a rental and buy a single family home. If you had $800,000 to spend, would you prefer to be closer to work or in a nicer area and buy a townhome - or would you rather live in a single family home in an area a little further out. It is not an easy decision, but it usually isn't based on what is going to happen in 3 to 5 years - you need to think about your situation today.
3 votes
Sam Shueh, , San Jose, CA
Sat Apr 26, 2014
If you plan to stay in the valley, suggest you take up a residence ASAP. All high tech workers with stock option are willing to over pay 100-300K as their stocks can go down. With real estate there is nothing in the horizon indicating there is a recession coming. If there is one it may keep the price at same level or go down 5-10% as in the past 30 years. You need to start somewhere. Those who moved up typ hold on to their old THs as an excellent investment.

Sam Shueh
Keller Wms Cupertino Realty
3 votes
Sam Shueh, , San Jose, CA
Sun Mar 9, 2014
Newer townhomes in CU today is close to a $1M regardless what they were sold for before.
With a 20% down not wanting to pay more than asked for(market condition) your choices are: 1.Save enough for a higher down, 2. get FHA with lower down and offer higher than conventional.

Most existing 3/2 in your preferred neighborhoods are already going 1.5M+. It will be soon the 4/2 will be 2M for SFH.

The motivation is the demand of housing and cheap mortgage. Plenty of high tech jobs push the urge to own something.

The economists do not foresee any sign of a recession affecting job loss in the horizon. No reason predict a price erosion.

Sam Shueh
Keller Wms Cupertino Realty
3 votes
Grace Hanamo…, Agent, Cupertino, CA
Fri Mar 7, 2014
Hi CR and thanks for your post.

A long time ago, I was in your situation--buy something small now, or buy something a little better later on. Truth be told and as hind sight is 20/20, I would have jumped into the real estate market a lot sooner and stretched that payment and my finances for the first home. Had I done that, I might be in a slightly larger home today or be sitting with even MORE equity in my current home. But, alas, I waited.

Although the market back in the late 80s and early 90s was vastly different than it is now (and interest rates in MY day were 11 percent on home mortgages--yes, 11 percent), had I purchased that first home when I had the chance, I would have accumulated over $100,000 more money (roughly 1/3 of the home's value) from the first home. Today $100K is not much money, but back when homes were $300,000, a $100K equity increase constituted a rise in the value of 33 percent.

So, my advice, do what I did NOT do, and purchase the home you can afford now, and--much like your work career--make systematic plans to upgrade the home as you progress through life. This is the way to manage your money and your real estate investments. You can always move up from your current home, but it can be tough to move IN to a house if prices continue to rise while income does not meet or exceed the same increase.

Good luck!!
3 votes
Diane Drewke, Agent, Saratoga, CA
Thu Mar 6, 2014
This is just my opinion but I would advise buying a home in Rivermark now. I expect that area and Evergreen, Silvercreek and Almaden to start rising even more than Cupertino, Los Gatos and Saratoga. The districts with "good" schools will start to flatten out as prices go higher and less people can afford to buy those homes. I expect to see more appreciation in areas that decreased more in the downturn. You can look back statistically and see what the highs were in these areas and what the spread was at the height of the market.

This way you can get equity and also have a hedge against prices continuing to rise. This is my expectation since inventory in Santa Clara County is even lower than last year at this time.

Here is what I have seen over and over. Prices get to the point that they rise so much people start having longer commutes and move out towards Tracy, Morgan Hill and Gilroy. Some people then start to move out of the state or take jobs in Sacramento. This has happened over and over during our cycles. If you buy in Rivermark you may at least keep better pace. Also you will be putting some equity away as opposed to paying rent.

Also people who own homes have a greater net worth than people who rent this comes out of the National Association of Realtors.

No one has a crystal ball but in my experience this is what you can expect to see.

Wishing you the best.
3 votes
I know but it always that way. As you have seen from other agents comments everyone has felt this way when buying in the Bay Area. But we have an excellent economy and our supply of homes continues to be exceptionally low which means that until you see the numbers change you can continue to expect a price increase. I would be happy to talk with you and share the numbers if you further information. My number is 408-482-8687
Flag Sat Mar 8, 2014
The prices of the townhomes in Rivermark are >10% than their highs in 2006. Buying a townhome for >750k is a bit scary for me. What do you advice? Thanks in advance.
Flag Thu Mar 6, 2014
Bryan Sweeley, Agent, Los Altos, CA
Fri Mar 14, 2014
It is very difficult to believe that real estate values will not continue to rise 5-10% per year over the next couple of years. The high-tech firms are hiring and employees living out of the immediate area are moving closer to work. The demand looks to continue to be strong to rising, while the supply remains fixed.

Your question might be best framed as what is the best alternative for the next 3-5 years: rent or buy a townhome/condo? Run the numbers. The key planning assumption is how you think home prices/values will move in this timeframe (I say up 5-10% per year). Then what is the annual cost to service this investment. I would recommend using a 7yr ARM to keep the interest rates low.

My guess is that the math computes a higher return on your investment by purchasing rather than renting. Besure to also project the price to buy a home in the future. Many buyers that stay out of the market, find themselves priced out of the market if they don't own real estate and are able to ride the wave with the market.

Let me know if you would like to talk further.
1 vote
Why did you suggest a 7 year ARM? In the case that I want to rent the property and move to a bigger place.
Flag Wed Apr 2, 2014
Ruth and Per…, Agent, Los Gatos, CA
Thu Mar 13, 2014

It comes down to whether you are going to be comfortable in a town home
as you are limited by funds.

If you wait a few years and the market moves up another 20%. then you have to bring more to the table
then and pay a higher mortgage.…

If you have a TH now in Rivermark, and it appreciates another 20%, clearly you are way better of buying
in the Rivermark community now.

Good luck

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1 vote
Juliana Lee, Agent, Palo Alto, CA
Thu Mar 6, 2014
Generally you want to plan to stay in a home for 5 years or more. The cost of buying, then selling, and buying a second time is significant when spread over only two or three years. However if your finances or family circumstances change, then moving a second time can be a good choice.

Rivermark is close to employers who create good jobs. If you believe the future holds business growth, then Rivermark housing demand will probably also increase, pushing up prices.

If you look at Trulia's rent vs. buy information it makes a case that it is currently cheaper to own than to rent. With low interest rates not only is your payment lower, the total amount of your money paying off the principle is greater. There is a double benefit to low interest rates! Home ownership is a real wealth building opportunity.

In general if you can find a home that you would be happy living in, there would be advantages to buying now rather than saving for a long time to buy what you currently see as being closer to your dream home. Your values will change and you should not under value the present. To really give you strong specific advice I would have to know more about you. I would like to talk more with you. Please don't hesitate to call or email.

Home values in Santa Clara zip code 95054 are provided at

Home values in Sunnyvale are provided at

Juliana Lee
Top 3 agent nationwide for 3 years at Keller Williams Realty, the nations largest
Cell 650.857.1000

Over 20 years experience
Over 1,000 homes sold in Santa Clara County and San Mateo County
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1 vote
Elena Talis, Broker, Palo Alto, CA
Thu Mar 6, 2014
Buy now and move up when you will have an opportunity.
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1 vote
Robert Lei, Agent, Cupertino, CA
Thu Mar 6, 2014
If your end goal is to buy a single family home in a good school district, then your best bet is to directly buy it today rather than hoping the prices of those good school home stay reasonable in 3-5 years. I'm still kicking myself for not buying a home in Monta Vista back when they were only $450k. By postponing that, I now have to pay 3x - 4x that amount. Same type of thing could and will probably happen to you if you delay buying the home in the good school district.

You should buy the best school you can afford.
1 vote
Thanks Robert. I cannot afford 1M+ homes in good school district. Rivermark's elementary school is pretty good but I have to move out after that and of course it's only a (3-leve) townhome I can buy now. Any further advice is appreciated.
Flag Thu Mar 6, 2014
Terri Vellios, Agent, Campbell, CA
Thu Mar 6, 2014
All we can do is base our decisions on today. The future is uncertain. We are only two years into our real estate recovery, so we may see prices continue to rise into 2016. Analyst expect a minimum increase of 3% per year, but we have been seeing huge demand on most properties where they are going significantly over.

So what is your current and long term goal? That is one question I would ask during a buyer consultation, then I would present information so you can make an informed decision for yourself and/or family.
1 vote
Your opinion is high appreciated.
Flag Thu Mar 6, 2014
My current goal is to at least lock-in my downpayment as an investment. Future goal is to buy a place where I can live for 25 yrs and my kids can complete their schooling.
Flag Thu Mar 6, 2014
David Allen…, Agent, Sunnyvale, CA
Fri Mar 7, 2014
Buy both if you can. Single family homes are always a better investment but then again Townhouse sales are also very strong so both are great.
I would buy now so you don't loose out on the appreciation headed this way and then trade up later.
Best wishes
0 votes
Manny macias, Agent, Sunnyvale, CA
Fri Mar 7, 2014
It is good planning to buy what you can afford now. Building equity and staying as close to the market as possible. Staying on the sidlined will definately cost you money. Good luck manny
0 votes
, ,
Fri Mar 7, 2014
Yes. HOA are truly the worst and just take money to do nothing. Just send me an email if you have any further questions.

Alex Greer
Loan Officer
NMLS #1056079
0 votes
, ,
Thu Mar 6, 2014
There are many loan options available today that do not involve mortgage insurance so you may be able to purchase a single family residence with less than 20% down.

Best wishes,

Elva Wormley,
Mortgage Consultant
(408) 615-8500
C2 Financial Corporation
2845 Moorpark Avenue, Suite 209
San Jose, CA 95128
NMLS #331981 / BRE #01274093
0 votes
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