Opinions are strong about homebuying in San Jose or anywhere in Silicon Valley right now. Should you buy or should you wait?
It's a little different for first time homebuyers than it is for those wanting to do a "move up" in Santa Clara County. First time homebuyers do not need to worry about having to sell something to buy something else - that is a freedom that current homeowners don't enjoy!
Let's look at the reasons why you should wait and the reasons why you should move forward now. You decide.
Plusses of waiting to buy a home in Silicon Valley:
- it is less scary to wait than to buy
- the purchase price could be less in the future
- selection could be greater in the future
- more time may allow you to save more money for closing costs, downpayment, remodeling
- 10% down loans are not easy to get anymore
Plusses of buying now in Silicon Valley:
- in 2008 we have higher conforming loan rates, which will expire at the end of the year - so it is very likely that the loan you get will be more affordable this year than later
- rents in the San Jose area are up about 7% and continuing to rise
- there are big tax advantages to purchasing a home that aren't available to renters
- buyers have the upper hand in this market and can get good prices in many areas, the repairs they want and need done, and their terms met far more easily than in a sellers market
It's only in retrospect that we'll know when was the "best time to buy" (or the best time to sell). Timing the bottom of the market is as difficult for buyers as is timing the top of the market for sellers. We only know when we've missed it that it happened!
Additionally, home buyers need to consider not just the price of the home, but ALSO the price of the loan. If your home price goes down but the loan rate goes up, what will be the net impact on your homebuying? In many ways, it comes down to what the monthly payment will look like - principal, interest, taxes and insurance. The relationship between interest rates and home prices is interesting. Often when there's little demand (buyers market), interest rates go down. When there's high demand (sellers market), loan rates go up, because loan products are like everything else - it's a matter of supply and demand. We see this seasonally, too, reflecting market activity.
Each year is a little different from every other year, but August tends to be a slow month in Silicon Valley (the Campbell, Los Gatos, Saratoga, Almaden, Cambrian Park areas as well as the rest of San Jose and Santa Clara County). Same from about Halloween to just after the Super Bowl. Those times often have lower prices of homes and lower interest rates, but also less buyer demand and less inventory. There's more inventory and more demand beginning around Valentines Day - but we tend to see interest rates rising then, too.
Your own situation is unique from everyone else's, but if you are able to buy your first home now, I would encourage you to seriously consider it. Speak with a highly reputable, experienced lender to see what your options are financially. Call or email me if you'd like to discuss the market or your plans.
With my best regards,
Mary
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