It?s a Buyer's Market in the Silicon Valley!

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by Tom Stynes

Silicon Valley single family housing inventories are up 11.6 and home values are down 16.3 compared to July 2007. Finally, we have a Buyer's Market in many Santa Clara County, CA communities. At long last buyers have leverage in price negotiations as compared to the peak years 2004 - early 2007 when homes were flying off the shelves and sellers were seeing 10 annual appreciation. Today's real estate market is normalizing; buyers finally have control, yet many are still trying to time the market as if they will know when we hit bottom. I need to ask, why aren't more buyers taking advantage of this golden opportunity? I can't explain it. The onslaught of short sales and foreclosures are affecting the values of non-foreclosure and non-short-sale homes thus lowering the value of all homes in the immediate neighborhood. We see in some cases homes which sold for over $1 Million in 2006 now selling for $775,000 - $825,000. It's hard to say if we've reached the bottom on pricing. Nonetheless, if we're not at bottom I predict we do not have very much further to go until we are. So once again I ask, "It's a buyer's market, so why aren't buyer's buying?!" I know Buyers are reluctant to move forward because the media has convinced the consumer we're heading toward a recession, causing home prices to drop further. And yes, it is harder to qualify for a loan since the credit meltdown in August of 2007. On the positive side, the U.S. congress passed and the president signed in to law the 2008 Housing Stimulus Package this past July. One of the major benefits to new buyers is the $7,500 tax credit for first-time home buyers. This is basically a no-interest loan to stimulate "on-the-fence" buyers to action. So, should you buy now or wait? As you will see it doesn't matter. Even if prices drop an additional 10 from current levels it's not going make a difference because lenders are increasing interest rates to improve their financial bottom line. In much of 2006 and most of 2007 a buyer could get a 30 year fixed rate at 6.0 now they're lucky to find that same loan at 7.0. So let's look at an example: Prices drop 5 or even 10 and we see an interest rate increase of .5 or 1.0 respectively. Buy Now or Wait? Scenario 1 Scenario 2 Home prices decrease by 5 Interest rates increase by .05 Home prices decrease by 10 Interest rates increase by 1.0 Home Price $600,000 Home Price: - 5 $570,000 Home Price: - 10 $540,000 20 Down <$120,000 20 Down <$114,000 20 Down <$108,000 Loan Amount $480,000 Loan Amount $456,000 Loan Amount $432,000 Interest Rate 6.0 Interest Rate: 6.5 Interest Rate: 7.0 Payment $2,878 Payment $2,878 Payment $2,874 Therefore, let's look at the facts: Housing inventories are up in the Silicon Valley so buyers have more homes to choose from. The U.S. government is trying to encourage buyers to buy now with interest free loans. Lastly, waiting to see if prices drop doesn't make sense because any savings in the purchase price is going to be offset by a higher cost of money. It's a Buyer's Market. Is it a good time to buy? Absolutely!!! More info regarding the 2008 Housing Stimulus Package available at www.federalhousingtaxcredit.com. If you'd like to discuss your individual situation, let's talk! You can reach me at 408.850.6962 or at tom@stynesgroup.com. I can also recommend several excellent mortgage professionals or financial planners who will aid you in this big decision. Tom Stynes, StynesGroup Inc at Keller Williams® Realty, 20230 Stevens Creek Blvd., Ste. E, Cupertino, CA 95014, Direct: 408.850.6962, Email: Tom@StynesGroup.com, Website: www.StynesGroup.com

About the Author

Tom has in excess of twenty years of diverse financial and real estate experience. He has held several positions in sales, product management and project management. Prior to Tom's real estate career, he was Managing Director for an Information Technology consulting group based in Foster City, California. Tom holds a PMP (Project Manager Professional) certification as awarded by the Project Management Institute, and runs his business accordingly. Professional Philosophy As a Broker Associate and the founder of StynesGroup, Inc., Tom's number one goal is assuring our clients needs are not just met, but surpassed. We strive to assure a home purchase or sale is as free of stress as possible. Our job is to be your advocate throughout each and every step of the process. Read more at It?s a Buyer's Market in the Silicon Valley!</a> View their website at: http://stynesgroup.com

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It?s a Buyer's Market in the Silicon Valley!

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