Should I buy a home now?

It funny, back in 2006 and 2007 almost no one was asking that question. Instead, they were asking, How much home can I buy?Wrong question at the wrong time. Fast forward to today and buyers should be asking how much home can I buy and not should I buy a home now.

Yes, I know, a real estate agent will always say yes when asked if its a good time to buy a home.But, today market offers an unprecedented opportunity. Let me explain.

First, take Santa Clara County mortgage rates, back during the peak of the bubble in 2007 30-year mortgage rates were in the low to mid 6% range. Today? Rates are in the low to mid 4% range, a drop of 50%.

Next, the median price for single-family, re-sale homes in Santa Clara County peaked at $868,500 in October 2007. It bottomed out at $445,000 in February 2009. Yes, you missed the bottom!

The median price has been in the high $500,000 to the mid $600,000 ever since.
SC_County_Real_Estate_Market_Report_July_2011

O.K., so you are afraid to buy because you dont know where home prices are going. Well, no one has a crystal ball, and, as Wall Street is fond of saying, the past is no predictor of future results. But, as Baron Rothschild is credited with saying, Buy when there blood in the streets, even if the blood is your own.

Now for the caveats, yes, there are caveats!

As always, the best homes, pristine move-in condition, in the best neighborhoods, i.e. schools, are selling first for the most money with multiple offers. If the best neighborhood is your primary criterion, and the best homes are beyond your means, consider fixer homes or condos and townhomes.
If the best neighborhood is not a consideration, but a pristine home is, you will find less competition in other areas.

The market in Santa Clara County is very spotty with towns like Palo Alto, Sunnyvale, Los Altos, Saratoga and Mountain View being exceptionally hot, primarily due to dot com and IPO millionaires: think Facebook and LinkedIn.

You will absolutely, positively need an in-depth neighborhood market analysis to buy or sell in this market.

DO NOT DEPEND UPON ZILLOW FOR THIS!!!

If I could get what Zillow says my home is worth, I sell it in a minute. According to my calculations, Zillow has over-valued my home by 36%, and that before selling costs!

P.S. The conforming loan limits are dropping from $729,750 to $625,000 for loans closing after September 30th. Some lenders have already stopped processing loans up to the $729,750 limit, and all lenders will likely stop on or around September 1 for new applications.

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