I’ve been thinking a bit about our cliche Realtor statement that now is “a great time to buy”, and I’ve come to a conclusion:
Now is not necessarily a great time to buy, as prices may continue to fall, credit is likely to continue to dry up, and the global recession only looks to be getting worse instead of better (poor Obama inherited a big mess didn’t he, and my iPhone continues to see red), but it IS a great time to be a buyer.
When I started in this business only 6 years ago, I never in a million years thought I’d see homes get into the “affordable” level again. Every single client I worked with could expect, without a shadow of a doubt, to have to offer way over asking price on a home, compete with at least 10 other buyers on every property, and strike out at least 5 times before the home of their dreams (usually only 80% of their dreams, because perfection was not to be had) became a reality. True, “affordable” is a relative term, but for the buyers that thought owning a home in San Francisco would only ever amount to pipes full of dreams, your day may soon be here.
I’m hearing from buyers that are literally coming out of the shadows (they’ve been reading sfnewsletter for quite a while), and they’re licking their chops. New developments are slashing prices, offering incentives, literally telling me “make an offer”, and prime homes are starting to trade for much less than anyone expected, and some are getting downright stale.
No, now might not be a “good time to buy”, but it sure as hell is a good time to be a buyer, and I think you’d have to agree.
I’d have to agree, it’s a better time to be a buyer now compared to a few years ago. I am sure agents will be a lot more attentive to the buyers just as sellers are more than willing to negotiate. Of course next year or the year after might be an even better time to buy. I am sure for a lot of people further price cuts are inconceivable but I think we still have a long way to go before we reach bottom.
http://sanmateore.dreamhosters.com/2008/12/cheapest-property-in-san-mateo-county-1-appian-way-714/
has a good example of a property bottoming out, sold for 500k and now on the market for 130k, probably would accept an offer of 100k.
130K.
sell your car, get your downpayment of 26K.
104K @ 5.6% (30fixed) = $597/month
104K @ 5.7% (20fixed) = $725/month
104K @ 5.6% (15fixed) = $855/month
(rate for 30years being the best one, I’d take that one, and add $103/month [total 700] to pay off in 21 years).
HOWEVER, unit is in 1979 condo. That means repairs and hoa and maybe annoying neighbors. You can always rent it out for storage units! two 10×25 units are $400/month each!!! Imagine if you build cubbies and rent one for each other unit in the building! KaChin! ;-)
Did a little bit of open housing this past weekend and it must be VERY frustrating to have a home on the market right now. There are scores of ‘lookers’ looking but the body language and chatter in the homes is very bleak. You used to always find buyers huddling outside a home with their agents talking strategy and you could see the offers brewing. No more. No lingering, no strategizing, and no offers.
Sure there are deals to be had out there and I encourage anyone that is looking to make a crazy offer. Deals are out there. If I were a buyer agent — I’d be filtering my home searches looking for sellers with more than 5 years in the home. These are the ones that have some equity that can move on price. Don’t even bother with homes with owners in there less than 3 years as they have unrealistic expectations and are in denial with regards to their investment / asset value.
Hate to say it but having a good buyers agent who will help you find the home within your budget is critical. I’ll also reiterate that if you are buying for the long-haul 7+ years it probably is a great time to buy. Will next year be better — my guess is a resounding YES. But it’s hard to time the market and homes don’t deflate as we buyers would like. Although this go-around is proving to be a bit different as values are being defined by foreclosures.
“now might not be a “good time to buy”, but it sure as hell is a good time to be a buyer, and I think you’d have to agree”
surely this should read Now is a good time to be a renter instead??!!
I’m closing next week on a house in Orinda, a place I never thought I’d be able to afford. After attending the open house in which I overheard ‘an offer is coming’ from another potential buyer present at the time (even with his contractor in tow taking notes and providing advice) I figured I’d be in the bidding war which no way I’d win.
Two days later I submitted my low offer and the seller responded, counters went back and forth and we had an accepted offer within a day. It all seemed too easy, the house was in a league of it own compared to comps and other houses we visited over the last 4 months with my agent. I wonder if it’s what’s led to this new habit or if this is normal after such a major purchase…
I find myself checking MLS in the area everyday to see if any new properties are for sale, price reductions or listings going into pending. Constantly evaluating if I got the best deal, how my purchase stacks up, any new comps, etc. It’s my new addiction, maybe it’ll go away once the papers are signed and I’m moved in.
Lev00,
Are you nuts! Stop looking at MLS. That’s the worst thing you can do. If you think you got a deal, roll with it. Enjoy your home. You’ll go crazy if you keep watching real estate. You’re in, move on.
Lev, congrats. How long did the previous owners live in the property? Also, be prepared to be hated by you neighbors who bought in the last few years! :-)
I agree with Jan, stop looking you can only depress yourself, there is no upside. A friend recently bought a house in the Riverside complex down in Santa Clara they made an offer of 80k less than asking and it was accepted. They are happy since they plan on living in the bay area for the long term. I am probably moving out of the area in 2-3 years so I don’t keep as close an eye on the prices as I did last year but there are people out there buying, I wonder how many will keep on buying if the stock market continues on its current slide.
Thanks for advice, I guess it does me no good considering I’m there for the long term, at least ten years or more.
eddy: the previous owners were the original since it was built in 68. It was an estate sale. In my 4 months of looking in Orinda all that ever came up in the sub $800k range was estate sales, relocation company owned, short sales and rare foreclosures. Finding a ‘normal’ seller never happened, maybe due to the extreme bottom of the market area I was looking at? i don’t know.
Not only do the prices seem right. . .rates may drop to an all time low. Stay tuned.
Seems there is some chatter about rates going lower… 4.5% for 30 year fixed?
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/03/AR2008120302889.html?hpid=topnews
If its a great time to be a buyer, then why do the graphs you supply on your site and in your newsletter show the median SFH price going up?
The one I can see right now shows a median SFH price of about $900k. WTF?
We have a LONG way to fall here.
I’m just wondering where all the foreclosures are in SF?
A lot of these overbidders from the last 10 years have to be falling out of their massive jumbo mortgages. I say, bring it on!
We need to get this down to realistic levels, then everyone wins, including the realtors that survive. The Sunset district and Westwood Park are not Manhattan, and shouldnt be priced as such….
Joe,
Great question regarding the graphs and why they continue to show sky-rocketing median sales prices. I had noticed the same thing. I’ve been meaning to contact the folks at Altos Research (they do the graphs) for an explanation, but keep getting sidetracked. I’ll shoot them an email and post what their response.
alex
Joe,
This straight from the guys at Altos Research that provide those charts:
“the San Francisco single family numbers looks just like a property mix thing. As of late summer that’s what was on the market. It appears to have subsided already. You’re displaying the 90-day rolling average, but if you look at the weekly data, it’s coming down. or something.
Check this Chart for Weekly Stats
It’s still not a good time to be a buyer if you’re putting down less than 20%. I have a great income, credit score of 800 and am trying to get a loan on a condo in SF in the mid-700s with 10% down. I can get a loan no problem, but the mortgage insurance companies have now twice refused to insure my mortgage so the deal falls through. What gives?
There was an interesting article in the NY Times a coupla weeks ago about this very subject available here: http://www.nytimes.com/2008/12/06/business/yourmoney/06money.html?_r=2&scp=1&sq=maybe%20it%27s%20time%20to%20buy%20that&st=cse.
Best deals are in new construction projects (think downtown condo towers for SF), where the developers are trying to get out from under their loans.
As to Altos Reports showing a stickily high median price, I believe they use an algorithm approach rather than actual sales data. That’s one of the reasons I prefer getting my data from the folks at REReports. They use actual MLS sales data. Their 3 month charts show that the median price has been falling since June. You can check it out here (click on SF for the city-wide graph or on any MLS District that interests you): http://www.pegasusventures.net/wordpressblog/market-trends/