If you have been sitting on the sidelines waiting to buy real estate because of the extremely competitive market, now might be a great time to make your purchase. With the exceptions of a few prime locations, Peninsula real estate is becoming more attainable. Prices are still very high compared to a couple of years ago, but we think that market conditions are becoming a little more balanced. Sellers are slowly realizing that they need to correctly price their property to attract buyers. There are fewer and fewer multiple bidding situations.
So is now a good time to buy? That depends. We know that “that depends” isn’t really a satisfactory answer, but there are some questions you first must answer before you can decide if buying real estate is something you should consider at this time. Probably the first thing you have to ask yourself is how long do you plan to be living in the area?
What is your employment forecast like? Acquiring real estate is directly related to employment. Not only do you need to consider job security, you need to consider what the employment forecast in your field looks like in general, and also the chances of a transfer or other out of area opportunities. Employment on the Peninsula is very strong. Over the long term, due to population growth and a strong job market, most people feel we will continue to have steadily appreciating market values. However, if you are forced to sell over the near term you might lose a significant portion of your equity due to short term market fluctuations.
For a quick real estate analysis of any property, we always look for three primary things: price, terms, and appeal. If you can get two of these three things in your purchase, you should probably go ahead and make an offer. The price is not always the most important thing to consider, but always a major consideration. Terms relate to any special financing available or perhaps owner financing, lease options, or attractive loans that can be assumed. Long term interest rates are still at historic lows, and that alone creates positive “terms”. Terms and interest rate are often the most important factors. Appeal not only relates to the home, it’s appearance and condition, it also relates to the neighborhood. Do the schools have high test scores? Are the homes in the area well kept?
The great weather we have in the Bay Area adds to the desirability and quality of life. Home prices are very high here compared to most other areas in California, but the desirability of the peninsula is also very high.
When you analyze rental prices, the difference between buying verses renting is often the down payment. It is impossible to try to time the market. Over the long term the fluctuations in the real estate market take on less and less value or importance. It is far more important to make a reasonable purchase if you are able; and the sooner the better.
You always need a place to live and, believe us, five years from now you will be happy you purchased when you did.
This article was published in the San Francisco Examiner.
Articles are written by Eric Ruxton and Larry Aikins, owners of Terrace Realty, Inc. and Terrace Associates, Inc. in Redwood City. Terrace has been in business more than 55 years and in addition to being an independent Brokerage Company, also owns and operates rental properties.