So you’ve seen the cheesy National Association of REALTORS commercial. You know the one where the family is sitting on the fence.
While San Francisco is lacking in white picket fences, we haven’t been lacking in potential home buyers that are sitting on the proverbial home-buying fence.
Now, not EVERYONE should be out there buying a home right now.
GASP! I know, I’m a REALTOR and I’m really NOT supposed to say that, but everyone is in a different position with different goals, different dreams, different priorities, different financial situiations, etc., and today isn’t the right day for you to buy unless, well, unless it IS the right day for you to buy.
But if you ARE on that fence and need some good reasons to ponder getting off (the fence, that is) and jumping into San Francisco real estate, here’s some good reasons why NOW might be the time for you.
1. Mortgage are LOW LOW LOW! One week after Freddie Mac reported rates of 4.85% on a 30 year fixed loan, they dropped even more to 4.78%! Now, this is for a regular old conforming loan (right now $417K and below) and agency jumbo loan limits (currently $629,500) bring with them a slightly higher, but still remarkably affordable rate. And even jumbo loans are coming with rates lower than we’ve seen in ages!
2. You use borrowed money to leverage your investment. I repeat as I have many, many, many times that real estate is NOT a get rich quick scheme. This is NOT a short term investment. In fact, you should plan on owning your home for at least 5–10 years. But, if you take a $150,000 into the stock market and your stock goes up in value by 10%, you’ve just earned $15,000. But, if you took that same $150,000 and used it as a down payment on a $750,000 home, and that home’s value increases by 10% (which it should over the long term), you earn $75,000!
3. You can paint it pink. OK, so if you paint your home pink on the inside, and then you ask me to eventually list it for you, I’ll make you repaint it neutral colors to appeal to the largest number of buyers. But, that being said, when you buy a home, you can do what you want with it. Of course, if you buy a condo, there will be some restrictions (maybe on the number or type of pets, or on the types of alterations you can do to the unit.) But for the most part, when you buy a home, it’s yours to do with as you please.
4. The price is right. Home prices in SF have slipped. They haven’t slipped drastically in every neighborhood, but statistics show that while some neighborhoods like the Richmond District have only dropped 6% or so from the peak, other neighborhoods, like Hunter’s Point and Excelsior have dropped 25% from the peak. This means that if you’re a first time home buyer looking to get your foot in the door, now’s your chance! And if you bought prior to the peak of the market, you can still sell your old home for a profit and take advantage of the lower prices to move on up to a bigger home, or to pocket the money tax free by using the homebuyer capital gains tax exclusion.
5. When prices start increasing again, you gain equity. While San Francisco prices haven’t dropped so drastically that you’re going to get rich in the next few years, eventually, prices will go up again and historically, real estate has always been a great investment. I client of mine bought a house recently for $1.6M. That same house in 1996 sold for $280,000. That house increased in value over 500% in just 13 years. No. Your story probably won’t be as good, but even a modest increase in equity is money in your pocket.
6. Help from the government to buy your home. A first time buyer credit of $8,000 and a $10,000 credit that can be used to purchase new construction in California might help you buy your first home if you qualify. (And if the credits are still available – the $10,000 new construction credit is only around as long as the money allocated is around.)
7. Your mortgage payment won’t change. If you get yourself a nice 30 year fixed intereste rate (which is advisable in many, but not all circumstances), your mortgage payment will stay the same for 30 years. Rent will go up. Gas will go up. Milk will go up. Even the cost of beer will go up. But your mortgage will stay the same.
You can email me to discuss whether now’s the right time or the wrong time for YOU.