What’s really happening in Real Estate today
It is perplexing and frustrating to continue to see news reports with people who could be considered little more than real estate pundits€ talk about only one side of the current real estate story. This week, the controversial stock market analyst Jim Cramer of Mad Money told viewers of The Today Show that If you buy a home now, you will lose money.” He went on to add “there is no money and no programs for first time home buyers. Down payment money is the biggest issue in the market, because young people don’t have any.” Housing is a good long-term investment it s not a day-trading activity. As we witness the steep increase in foreclosures among housing boom flippers€ who secured sub-prime, adjustable rate loans with no money down, we see the folly of playing the housing market like the stock market.
Homes are not stocks. Most people stay in their home for about 6 years they buy for the long haul to create a home for their family, not to buy, then turn around and sell six months later. Owning a home isn t just about investment, although that s certainly important. It s also about building community, a place of your own, and having a part of the American Dream. For people who want to buy a home to live in, this is truly a great time to buy a home. In some areas there may be more to choose from, mortgage rates are historically low and the economy is strong. There are some investor opportunities out there as well, but it s important to remember that the criteria regarding these buying decisions are different between the investor and the homeowner. In our area we have seen steady appreciation in home values over the last 30 years. Regarding the median prices in many parts of the Bay Area and Silicon Valley, most specifically in San Francisco and the Peninsula, properties are not only holding steady, but actually increasing. The case could easily be made that waiting for prices to drop may make the realization of home ownership steadily more difficult. Signs aren t pointing to bargain basement pricing ever becoming the norm in our markets, though price is now, as always, an important consideration. Smart buyers are buying. Smart sellers are selling.
Witness the number of buyers visiting our more than 600 homes held open last week. A Berkley listing was seen by almost 100 visitors. A Walnut Creek listing received four offers and sold for three percent over the current asking price. In San Mateo Park, a home received five offers and the lowest down payment among them was 50 percent. Palo Alto continues to report 100 percent multiple offers. One San Francisco office notes that the $2 million-plus market is on fire.€ The upper end markets are clearly not sending a negative message in fact, quite the opposite. Last week San Francisco Van Ness closed both sides of a $7M property in a two week long escrow, and in the same week Woodside opened a new sale for $12M, sold by a fellow CB Menlo Park-El Camino agent, and the following day Woodside opened another $13M sale. Again, the message is quite the opposite of the doom and gloom which make headlines.
I encourage people to get the facts from an experienced real estate professional, the person most qualified to discuss the merits of home ownership. Not from a stock broker on television. Now more than ever, there is immense value in working with a real estate agent affiliated with a full-service brokerage, the professional who can guide clients through the financial elements of the real estate transaction from negotiating price to serving as a guide to the mortgage market. At Coldwell Banker Residential Brokerage, we also have a strong, in-house mortgage partner in Princeton Capital who can identify appropriate financing options for customers.
It’s true I think most would agree newspapers and the media have a hard time selling stories based on good news…they much prefer controversial, shocking, and sad stories that attract attention. It’s really what we as readers want!
When it comes to buying real estate for our families it’s important to consider the facts before buying into what some pudits are saying. For example, take Jim Cramer of “Mad Money” who told “The Today Show” viewers “If you buy a home today you will lose money” He went on to add “there is no money and no programs for first time home buyers. Down payment money is the biggest issue in the market, because young people don’t have any.”
Well let’s examine the facts….ask Bank of America about their “Acorn” loan program. This program designed specifically for first time home buyers offers a “first timer” the ability to buy a home up to $500,000 and only have to come up with $500…yes $500. And this interesting and helpful program doesn’t require a high “fico” score to qualify. Many young buyers usually couples make good money and can afford a pretty healthy monthly payment but can’t come up with a substantial down payment. Thank you BofA….and to the many other lending institutions that offer similar programs. What say you Jim Cramer?
By the way, in Palo Alto real estate market, you should know that 100% of the transactions completed recently were the result of “multiple offers”…as you might guess multiple offers don’t have the effect of lowering prices…just the opposite. What say you Jim Cramer?
For people who want to buy a home to live in, this is truly a great time to buy. In many markets there are lots to choose from, interest rates are still at historically low levels, and the economy and employment is strong. By the way the California Association of Realtors began keeping track of home appreciation in 1968 and year over year since then homes have appreciated nearly 9% a year accross the board. What say you Jim Cramer?
I think we would agree “homes” are not stocks. Most people stay in their homes for 7 years and generally buy for the long haul. Owning a home isn’t just an investment, although that’s certainly important. It’s also about building community, a place of your own, and having a piece of the American dream.
About buying or selling now….the adage “he who hesitates is lost” works for me and what I see and observe in our unique San Francisco bay area.
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