"Is it a good time to buy a home in San Jose, CA"? This is the million dollar question that prospective buyers ask me few times a week. Surprisingly, there are still folks out there thinking the home prices will drop significantly more, alluding to the media's concept of the 'double dip recession'. To that end, I have few things to share that might get you off the fence about buying/selling homes in the San Jose/South Bay Area:
1. Housing market 'statistics': the local newspaper usually paints a grim pictures of how much the price has dropped. I continue to educate buyers/consumers that the news media is there to SELL newspaper, and not necessarily providing the most relevant information. Anyone with basic understanding of 'statistics' will see that statistics is merely a composition of numbers, and is a snap shot of the market and may not give you a complete picture. For example, 2 years ago, the housing market statistics showed a significant lower of median price; it reflected the general down trend of the market. However, it failed to recognize that the lower prices also reflected that the lower priced homes were selling at a faster rate than the mid to higher priced homes, i.e. bank owned homes were selling more and faster than luxury homes. Now that the downward trend has reversed to a more normal real estate cycle, interpretation of the forever-changing housing statics shall be exactly what it is: it's just a change in the composition of the homes that were selling in that particular reporting period. In fact, according to Clear Capital's latest monthly Home Data Index Market Report, our San Jose-Sunnyvale-Santa Clara market is among the top seven highest performing major housing markets.
2. 'Buy low, sell high' is the goal for most people, and I will take this a step further by advising clients this important concept: the housing market will fluctuate on a seasonal basis as well as the bandwidth of the price-level of homes selling. Taking the last concept, housing statistics is composed of numbers, and depending on a particular quarter of the prices that are selling, your housing value may fluctuate accordingly. The important point to remember is that as long as you're buying to live or to hold for a long period of time, the floatation means very little to you. As long as you buy low (NOW), and sell high (10 years from now, for example), you are in a good shape. With San Jose being the capital of Silicon Valley (stable employment) and the desirable weather, there will always be demand, thus leading to modest appreciation rate over long run. According to forecastchart.com, during the last 12 months, San Jose home prices had a rank of 16, with appreciation during the year of 2.18%.
3. Historical low interest rate and home prices: with a strong FICO credit score & steady employment history, your interest rate may be as low as 4.5% on a 30 years fixed rate mortgage. Normally, the mortgage interest rate is somewhere in the 7-8%, and as the graph show beblow, interest rates were in the 20% in the early 80s. Relatively, now it is a GREAT time to take an advantage of the low interest rate. Additionally, the home price is much more affordable than what it used to be during the boom times. Remember the buy low, sell high idea? NOW is the good time to BUY LOW.
Reproduced with the permission of Mortgage-X.com
Last point to remember: is it a good time to buy a home in San Jose, CA? The answer really depends on your personal situation. And I can help you to determine the right path to take. I'm more than happy to provide some obligation-free consulation. Contact me to get started!
Comments(1)