It’s January 2, 2008, and you’re in the market to buy a house in Sunnyvale, California (or any of the surrounding cities in Santa Clara County). But you have concerns; is it the right time to buy a home? Will real estate prices or interest rates begin to go up again soon? What is the market going to do in Sunnyvale, over the next six months? If I wait to buy a home, will prices be lower in a few months? These are all legitimate questions, so we’ll share our opinions, and invite your feedback!
When the housing market slows down, buyers often choose to wait on the sidelines for a clear sign that the market has recovered. The problem with this strategy is that you can only know for sure that a market has turned through hindsight, AFTER there is proof that it has turned. In other words, you can’t time the market (sound familiar?).
A slow market is perceived as an opportunity by some buyers, as it takes longer for listings to sell. The inventory of unsold listings tends to grow, giving buyers more choice than is the case in a hot seller’s market, when listings sell quickly. In a high-inventory market, there are usually fewer multiple offers so buyers can cut a better deal with the seller.
OUR ADVICE: It’s a buyer’s market. Which means, it’s a great time to buy!
The major risk of buying in a slow market is that the value of what you buy might drop before it rises. Or, prices could stay flat for some time, which means that you won’t build equity unless you pay down principal on your mortgage. If you in turn need to sell at a time when prices are soft, you might not be able to sell for the amount you paid.
OUR ADVICE: To decrease this risk factor, don’t buy for the short term.
The least expensive home in an area may not be the best investment. Unless you are a contractor with years of experience fixing up properties, you should look carefully at the condition of a property before you buy. Many home buyers, particularly first-timers, don’t give enough attention to the cost of maintaining a home. Home maintenance is a necessary part of home ownership. It can be expensive, particularly if you need to hire others to do the work. Some homes require more maintenance than others.
OUR ADVICE: Always have the home professionally inspected before you’re committed to the purchase. A good inspector should be able to give you a good indication about how much work a home needs now and how much it will need on an ongoing basis. Buying a well-maintained home that will also have relatively low ongoing maintenance is one way to keep your overall housing costs down.
Inexperienced home buyers should resist buying a fixer-upper just because it’s offered at a cheap price for the neighborhood. It’s difficult to get a firm grasp on renovation costs during the inspection contingency period, particularly if it’s a big job.
And keep this in mind: remodeling projects usually run over budget because of unanticipated problems like faulty electrical or plumbing, or an old furnace that goes bad. Or the city inspector could require that you do additional work to correct non-code-complying improvements done by previous owners. These sorts of costs can mount up so that you end up with far more invested in the property than it’s worth on the market.
OUR ADVICE: try to avoid buying a home that has an incurable defect. This is something that you can’t change, like a location next to a freeway. In a good market, anything can sell. However, these homes don’t hold their value well when the housing market softens, and become much more difficult to sell.
Give careful consideration to how you finance your purchase. Stay away from mortgages that have short due dates and balloon payments. If the market in your area stays soft for longer than anticipated, you don’t want to be caught having to refinance at a time when your home might not appraise for the price you need to complete the transaction.
OUR ADVICE: use a reputable mortgage broker, with a good track record and years of experience. They’re worth their weight in gold.
Please share your thoughts on the above and any other real estate topics that you’d like to discuss; we invite your feedback!
Gary J. Shapiro and Robert A. Gosalvez
The SV Home Team at RE/MAX
Direct 408.861.4813 Office
Email Team@SunnyvaleRealEstate.com
Web www.SunnyvaleRealEstate.com
Portions of the above are excerpts from an article written by Diane Hymer in The Inman News, 2007.
The SV Home Team has specialized in helping buyers and sellers in the Sunnyvale, California real estate market since 1978. We have combined full-time experience of over 60 years, with over 1200 successful transactions; more than half being right here in Sunnyvale.
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