palo alto, ca

Asked by Jay Strike, New York, NY Sat Oct 11, 2008

This should be required reading for all Palo Alto area realtors. Read it and weep, this area's gonna tank just like the others and you're all gonna be flipping burgers soon. Losers!

. Vicky, are we talking about the same Santa Clara county?

I know bay area quite will having lived here for a long time. Bay area is NOT different wrt real estate. It goes up and down with the tech jobs.

Regarding matthew's points,

1) You have the most to lose if you buy now at the still near peak values in Palo Alto. Wait for a year. Bargains can be had. Be ready with cash.

2) Tech companies have just started layoffs. Look for a string of layoffs in the next couple of quarters. This will depress prices close to 2001 levels.

3) Realtors say they don't have a crystal ball only when the prices are going down. When prices are going up, they are always ready with a crystal ball predicting prices will be even higher if you wai

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Eric Trailer, , Palo Alto, CA
Tue Oct 14, 2008
Hi Jay,
While I'm not sure what the question is here, I am presuming that it's maybe that you're looking for a solid argument as to why now is a very good time to buy a home, Palo Alto or otherwise.
When one sticks with the fundamentals of buying a home, such as having a long-term intent to own of five+ years, even with the challenges of the current market, there is more than enough empirical evidence to support owning versus renting. Personally, I have bought at the low (1994), the high (2000) and the middle (2004), and each purchase has provided a nice increase to our net worth.
What's more important than price is cost. Sure, it's certainly possible that values will continue to drop in certain areas. But the consensus on interest rates is that they are rising; thus, even if one obtains a home for less of a price, it's highly likely that the monthly cost to own will be higher in the future. And what if the worldwide government's efforts continue to stabilize the various markets and banking systems? You will see inflation, higher property values and higher interest rates, making it even more difficult to own.
But let's say that you're right about homes in Palo Alto dropping to a median of $1mm (off by over 33% based on today''s median) and that people need to be prepared to pay cash in 2009 (is this because you believe that financing won't exist in 2009?). If this is the case, then the buyer needs to have a $1mm already or needs to save $85,000 per month; either way, the profile of this buyer is in the seven figures, and likely smart enough to buy today, finance at a reasonable level and hold for at least the next five years.
I wish you success in your home prchase in NY.
Kindest regards,
Eric
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