Valley of Heart's Delight Blog

Homebuying in Silicon Valley Today

What do you need to know if you are shopping for a home in Silicon Valley right now?

First, you need to understand that possibly more than in any other time, it's all about location. Homes on the east side are struggling to sell while homes in the west valley are experiencing what seems to be a seller's market.  In my 14 year career, I have not seen this before - usually it's a case where everyone is doing well in the same price point. Not so today. If you want to live in the east valley area, that means you can get more home for your money than usual. But it may also be harder to sell later - we aren't sure what the long term impact will be. And if you want to buy in Almaden, Los Gatos, Saratoga, Cupertino or Sunnyvale, forget anything you've read about it being a buyer's market. So first of all, know your market and what the situation is. Talk to a lot of people and do research.

Secondly, understand the pros and cons of the two available purchase agreements. In our area, when you purchase a home you might use the California Association of Realtors purchase agreement.  Or, you might use the Peninsula Regional Data Service contract. 

Why does it matter which one you use?

One is an "as is" agreement. The other stipulates that at closing the home must be in a certain kind of condition (a few of them include: no leaks in the roof or other places, no cracked glass, all systems operating).

One says that all repairs must be done by a licensed contractor (as opposed to "in workman like manner").

One form lays out penalties for defaults (which can mean delays in closing). The other doesn't.

Some agents will just put either of these forms in front of you - but you may want to be familiar with both so that you can make an informed decision about which one to use. Or perhaps you might want to incorporate some of the concepts from one into the other (e.g., what happens if the seller isn't out on time?).

Third, once you select your home, before writing the offer, do a lot of homework. Check out the school district scores (schools drive the long term value of the neighborhood).  Read any pre-sale inspections (better listing agents will have a termite and home inspection on a single family home) and make sure you understand what is in the reports.  Learn about any natural hazard zones (earthquake fault zones, flood plains, liquifaction areas) and whether you would be required to carry special insurance. Investigate the neighborhood by revisiting the street several times, at different times of the day and days of the week. Check on things like too many cars on the street, noise levels, grafitti too.

Remember that there are things you can change (color of paint, carpeting) and things you cannot change (neighborhood conditions, school scores, natural hazard issues).  High voltage lines will always be there, as will a freeway or train tracks - so think long and hard before deciding on purchasing a home with an adverse condition that you can't fix.

Also, on the short list of things to do (not an exhaustive list!) when homebuying in Silicon Valley, see a lot of homes. Do not just buy the first home you see. In my experience, most buyers need to see about 20 homes, sometimes 30, before they feel ready to purchase.  Open houses are a good way to get in and out of a lot of homes quickly and easily. Take note of things like the layout, the light, noise, potential, and things you might be needing in a home.

If you are working with a good agent, he or she will educate you as you go through the homes, and will point out things that might not jump out at you if you go it alone.  So finally, I would add, "hire a good agent". Choose someone knowledgeable, experienced, attentive, and insightful.  If you tell your agent that running or mountain biking is your hobby, that professional may suggest seeing a particular neighborhood that has an extensive network of trails nearby.  Find a good agent, tell her or him what is important to you, and then learn from your Realtor as you go through neighborhoods and homes.

For more information on home buying, please see the chapter on my website about purchasing a home. There you will find a lot of information, plus access to links and free reports:
http://www.popehandy.com/buying/index.cfm

Happy house-hunting!

Bifurcated Market

Broderick Perkins of Deadline News lays out what is going on with our split Silicon Valley Market in his article Silicon Valley Haves-Have-Nots Rift Widens.

The article matches my experience that the wealthier areas of the valley (mostly in the west side communities of Los Gatos, Saratoga, Cupertino, Sunnyvale etc.) have low inventory and multiple offers and prices are rising, wheras lower priced housing on the eastside is much more of a buyer's market.

Prices Are Still Rising

In the next day or two, we will get the stats from April sales in Silicon Valley. Meanwhile, the early reports are that prices are continuing to rise in the greater San Jose area.

With all the national doom-and-gloom, it would be easy to believe that the sky is falling. Or at least that prices are falling. In many places, they are - but not here. 

Why not?   Simple:  supply and demand.

Despite what you may hear, more people are coming into Silicon Valley than are leaving it.  Santa Clara County has about 1.8 million people, and the largest city is San Jose, with just under 1 million of them. Last year, San Jose grew by 1.6%. 

In my office, we are hearing of a lot of multiple offers in entry level to mid-level homes in the west valley communities of Los Gatos, Cambrian Park, Almaden, Saratoga, Cupertino, Los Altos, Sunnyvale, and all the areas along the highway 85 corridor near the coastal foothills.

Today I was asked to complete a survey and one of the questions was "when do you expect the market to hit bottom?"  My response: we did already, last December.