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bobby.
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March 23, 2012 at 3:48 PM #740454April 25, 2012 at 9:56 AM #742195
bobby
Participanta little update.
this time I will use concrete numbers as this will be more illustrative.wife and I dutifully go to open houses every Sunday 1-4pm.
we had originally budgeted $900-950K and below (in order to go under the conforming amount of $625K) and get the best mortgage rates. We could borrow more but don’t want to.
we found out that we don’t like anything at this price range.
So we started checking out pricier houses a couple of weeks ago.We had been going without an agent but met one who is very eager to show us some local properties. He showed us properties running about $1 to 1.1 million. My wife love them. This agent asked us to place bid of $25-50K over asking price. He thinks this will give us the best chance.
I am reluctant to do this b/c this sounds like a game. Also this requires stretching the budget.Wife and I decided to wait b/c we saw how crowded the open houses are – market is likely very heated.
To confirm our suspicion, our agent let us know the result of the properties we are interested in.
property 1. Asking $1055K. Sold in 4 days after accepting bid (we drove by and verified this. Likely all cash and no contigency)
property 2. Asking $1050K. Sold in 6 days at $1062 (seller agent is partner of our RE agent so he got the scoop).
property 3. Asking $975. In escrow after 3 days. not sure of amount.we think we are better of waiting till fall. We will still be searching but it’s looking like 2005 all over again.
April 25, 2012 at 10:03 AM #742199SD Realtor
ParticipantIt is really tough out there right now. Try to be patient or maybe even take a break.
April 25, 2012 at 10:49 AM #742200CA renter
Participant[quote=SD Realtor]It is really tough out there right now. Try to be patient or maybe even take a break.[/quote]
Agree with SDR. There is another mini-bubble going on right now due to the artificially low interest rates (and concerns about various currencies, IMHO). In your area, you also have the most recent tech bubble to contend with. I think there will be better opportunities for patient buyers in the future.
April 25, 2012 at 11:32 AM #742202sdrealtor
ParticipantI dont think anyone can predict the future and writing off the booming tech industry as a bubble is a bit naive. What is occuring in your area is not all that dependent on artificially low rates. You are in the center of the worlds tech industry which is the hottest sector on the planet now and should remain so for your lifetime and your childrens. Once Facebook mints a slew of new millionaires it will only be time before the next tech behemoth IPO follows. Do you think that one will come out of the Bay Area or Peoria? It is what it is….
Beware of LETDLITA!
April 25, 2012 at 12:10 PM #742205bearishgurl
Participant[quote=bobby]a little update.
this time I will use concrete numbers as this will be more illustrative.wife and I dutifully go to open houses every Sunday 1-4pm.
we had originally budgeted $900-950K and below (in order to go under the conforming amount of $625K) and get the best mortgage rates. We could borrow more but don’t want to.
we found out that we don’t like anything at this price range.
So we started checking out pricier houses a couple of weeks ago.We had been going without an agent but met one who is very eager to show us some local properties. He showed us properties running about $1 to 1.1 million. My wife love them. This agent asked us to place bid of $25-50K over asking price. He thinks this will give us the best chance.
I am reluctant to do this b/c this sounds like a game. Also this requires stretching the budget.Wife and I decided to wait b/c we saw how crowded the open houses are – market is likely very heated.
To confirm our suspicion, our agent let us know the result of the properties we are interested in.
property 1. Asking $1055K. Sold in 4 days after accepting bid (we drove by and verified this. Likely all cash and no contigency)
property 2. Asking $1050K. Sold in 6 days at $1062 (seller agent is partner of our RE agent so he got the scoop).
property 3. Asking $975. In escrow after 3 days. not sure of amount.we think we are better of waiting till fall. We will still be searching but it’s looking like 2005 all over again.[/quote]
bobby, I am in agreement with SDR that you take a short break to reassess your wants. It sounds like your spouse’s wants trump yours. In the meantime, find out exactly what properties 1 and 3 actually sold for. You need to have a very candid discussion with your spouse about her continuing to be employed FT into oblivion (children or no children), IMHO (taking 6 to 10-week paid maternity leaves). This is the reality. You need to discuss with her in detail why she thinks she needs more square footage or a more modernized house than what is available in your price range. You need to discuss your ability to remodel a property room by room, even if you have to have the work contracted and if this will leave you feeling more comfortable than taking on a jumbo conforming mtg.
Your mutual housing decisions are a two-way street. If you wish to ride a bike to work and save gas, your wants should also be considered by your spouse, IMO.
Your spouse needs to understand exactly what your life will be like if you and she have to commute over a bridge or down to SJ/Morgan Hill every day and also possibly pick up kids after work (in order for her to get what she wants in your price range).
You don’t really sound like you are comfortable paying $1M for a house and your preferred area (peninsula) will NOT become cheaper, IMO. The “season” you’re shopping in makes no difference. I would not take out a mortgage for $100-$200K more than I was comfortable with, even if my spouse wanted to. It is a sure recipe for marital strife down the road and could put your family home at risk for foreclosure if you (likely) find yourself having to borrow (from your “downpayment equity”) in the future to survive.
Sometimes it takes a little break from “shopping” while you gather information in order to come back in as a RE buyer with a little more reasonable expectations.
April 25, 2012 at 12:24 PM #742208Jazzman
ParticipantNumber 4 answers your question for you. A very common complaint is shortage of inventory. Open house activity is not necessarily an indication of buyer intention. $400-$600 per sq ft is very high and you need to consider additional costs such as repairs and remodeling. I bought in Maui for $270 per sq ft and left California because of the problem you describe. It just wasn’t worth it to my mind competing over questionable quality and over-inflated prices. Nothing really changed from the heady days …or so it seemed.
April 25, 2012 at 2:06 PM #742217Participant[quote=sdrealtor]I dont think anyone can predict the future and writing off the booming tech industry as a bubble is a bit naive. What is occuring in your area is not all that dependent on artificially low rates. You are in the center of the worlds tech industry which is the hottest sector on the planet now and should remain so for your lifetime and your childrens. Once Facebook mints a slew of new millionaires it will only be time before the next tech behemoth IPO follows. Do you think that one will come out of the Bay Area or Peoria? It is what it is….
Beware of LETDLITA![/quote]
“SOME time after the dotcom boom turned into a spectacular bust in 2000, bumper stickers began appearing in Silicon Valley imploring: “Please God, just one more bubble.” That wish has now been granted. Compared with the rest of America, Silicon Valley feels like a boomtown. Corporate chefs are in demand again, office rents are soaring and the pay being offered to talented folk in fashionable fields like data science is reaching Hollywood levels. And no wonder, given the prices now being put on web companies.”
http://www.economist.com/node/18681576
Yes, interest rates determine what people do with their money and change the risk/reward ratios. I would argue that low rates most certainly push people into all kinds of investments they normally wouldn’t make, and at prices they normally wouldn’t pay…including housing (for personal use and for investments), and other financial and non-financial assets. The stock/IPO market and private equity/VC/etc. funds are flowing with cash that is desperately searching for a pittance of a return. We are witnessing the continuation of the credit bubble, and it will continue for as long as interest rates are at these artificially low levels, IMHO.
It is what it is…
April 25, 2012 at 2:25 PM #742221UCGal
Participant[quote=bobby]a little update.
We had been going without an agent but met one who is very eager to show us some local properties. He showed us properties running about $1 to 1.1 million. My wife love them. This agent asked us to place bid of $25-50K over asking price. He thinks this will give us the best chance.
I am reluctant to do this b/c this sounds like a game. Also this requires stretching the budget.property 1. Asking $1055K. Sold in 4 days after accepting bid (we drove by and verified this. Likely all cash and no contigency)
property 2. Asking $1050K. Sold in 6 days at $1062 (seller agent is partner of our RE agent so he got the scoop).
property 3. Asking $975. In escrow after 3 days. not sure of amount.
[/quote]You only provide hard data for one case. And that one is less than the 25-50k above asking that your realtor recommended. Not enough data to say for sure your realtor is giving you less-than-optimal advice… but it’s the only hard data point you give.
April 25, 2012 at 2:48 PM #742223ParticipantFinding bubble articles about the dot com and Silicon Valley is such easy fodder. Problem is the area has been one tech boom after another for the last 40+ years and its not about to change anytime soon. Imagine what would be going on up there today if the country wasnt in one of the toughest downcycles in the history of the USA. What will the next tech boom look like when the country returns to sounder footing?
Pessimists always see the glass half empty. Optimists always see it half full. I just see half a glass that I’d like to drink.
April 25, 2012 at 2:50 PM #742224Participant[quote=CA renter]“SOME time after the dotcom boom turned into a spectacular bust in 2000, bumper stickers began appearing in Silicon Valley imploring: “Please God, just one more bubble.” That wish has now been granted. Compared with the rest of America, Silicon Valley feels like a boomtown. Corporate chefs are in demand again, office rents are soaring and the pay being offered to talented folk in fashionable fields like data science is reaching Hollywood levels. And no wonder, given the prices now being put on web companies.”
http://www.economist.com/node/18681576
Yes, interest rates determine what people do with their money and change the risk/reward ratios. I would argue that low rates most certainly push people into all kinds of investments they normally wouldn’t make, and at prices they normally wouldn’t pay…including housing (for personal use and for investments), and other financial and non-financial assets.
It is what it is…[/quote]
Interesting article, CAR. I’m out of the stock market right now but I DO think there will be FB and Linkedin copycats who will try to cash in on the “irrational exuberance” of investors due to the huge IPO’s about to spin off. These two aren’t the only ones. One of my kid’s companies in the heart of SV is soon to spin off as well (unrelated to FB and Linkedin so has its own specialized mkt), and gave all their employees stock with an option to buy more shares.
In the OP’s case, I think it is sad that only mostly fairly nondescript 1100 to 1500 sf homes are available in his price range in their stated preferred 3 micro-areas. SV DID take a nosedive in value for about 1-3 yrs (2000-2003) and then its prices were back up again. In about 2007-2008, I was again seeing fixer 2000+ sf ranch houses with good bones on 1/3+ AC lots in Saratoga with asking prices of $475K – $550K. Those days are permanently gone, methinks. Like Fleetridge (SD), which has these same types of properties on slightly smaller lots, there are few to zero available now which have not already been remodeled. The cheapest (unremodeled) one I saw online about ten days ago had an asking price of $1.175M and is no doubt gone by now.
The OP is in a situation where he is “waterlocked” on two 45-mile sides. Save “Foster City” (encumbered by HOAs/CFDs) there hasn’t been any SFR tracts developed there in at least 40 years. He and his spouse must accept the inventory that is available to them in their price range and be happy that their daily “commute” will be =<20 mins.
The SF alternative might be worth looking into if they knew they would not have a family. It will likely NOT be a SFR. Cheaper alternatives are Daly City, Milbrae and San Bruno. Since they weren't too thrilled with what they already saw in their preferred areas, I can't see them liking what is likely on offer in these 3 small cities. Daly City, in particular, has many substandard (<5000 sf) lots.
The SJ/Morgan Hill alternative is would likely be a lengthy daily commute in heavy traffic for them, IMO.
The (bridge) alternative is having a completely different lifestyle entirely. It's not the same as commuting from 92028 Esco to Carlsbad. In the long term, it will likely prove to be unsustainable ... very tiring and "hardscrabble," IMHO, ESP if they start a family. It will likely eventually cause both of them to look for employment in their own county.
Given the choice, I'd make the best deal I possibly could on a 50's ranchette on as large a lot as I could get in one of my 3 preferred areas and be happy :=}
Overall, I'm bullish on SV, regardless of how "irrationally exuberant" it may sound to some. For many reasons, it has an extremely high quality of life which cannot be duplicated in SoCal or inland counties. One of which is very careful planning by the forefathers of its many jurisdictions. This is part of the reason for the higher values there which has nothing to do with the presence of tech companies.
April 25, 2012 at 3:08 PM #742226Participant[quote=sdrealtor] . . . Pessimists always see the glass half empty. Optimists always see it half full. I just see half a glass that I’d like to drink.[/quote]
Isn’t it just a bit early in the day to be looking at “half a glass??” ;=]
April 25, 2012 at 3:44 PM #742227Participant[quote=sdrealtor]Finding bubble articles about the dot com and Silicon Valley is such easy fodder. Problem is the area has been one tech boom after another for the last 40+ years and its not about to change anytime soon. Imagine what would be going on up there today if the country wasnt in one of the toughest downcycles in the history of the USA. What will the next tech boom look like when the country returns to sounder footing?
Pessimists always see the glass half empty. Optimists always see it half full. I just see half a glass that I’d like to drink.[/quote]
If the country (and world economy) wasn’t in such dire straits, interest rates wouldn’t be this low and investors would have more (and better?) investment opportunities that might not be at all related to tech. Nobody knows what it would look like, but I don’t think we’d be seeing these valuations in tech if the economy were better and interest rates were normalized. I could easily be wrong, though.
I prefer to think of myself as an optimistic realist. 😉
April 25, 2012 at 4:47 PM #742229an
Participant[quote=CA renter]If the country (and world economy) wasn’t in such dire straits, interest rates wouldn’t be this low and investors would have more (and better?) investment opportunities that might not be at all related to tech. Nobody knows what it would look like, but I don’t think we’d be seeing these valuations in tech if the economy were better and interest rates were normalized. I could easily be wrong, though.
I prefer to think of myself as an optimistic realist. ;)[/quote]
Do you remember 98-2000? Interest rates were higher and economy was booming. So, you’re right, we won’t be seeing these valuations in tech, we’d be seeing MUCH MUCH higher valuation. Try taking the P/E ratio of tech companies in 2000 and apply it to today’s earning. Let me know what Apple’s market cap would be?April 25, 2012 at 4:49 PM #742230ParticipantThx I was hoping someone else would point that out
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