In Silicon Valley, the prices of houses are rising fairly dramatically right now. In some cases, it’s 10% or more month over month for certain types of homes & price points. I’m frequently seeing houses in the $900,000 to $2 million range getting multiple offers (5-7) and selling for $50,000 to $150,000 over list price. In Cupertino and Palo Alto, it’s worse – sometimes more than 20 offers per house!
With rapid housing price appreciation in Silicon Valley, home buyers who are “patiently waiting” for more inventory and just the right house to come on the market can end up finding themselves “priced out of the market“.
What does it mean to be “priced out of the market”?
In a nutshell, it means that while a few months before, you could afford the type of house you wanted (more or less), but prices have risen so fast that now you feel that you cannot buy anything at all. You feel that it’s no longer worth it to buy – so you continue to rent. And you continue to watch prices rise, both for the home you wish you had bought but also the rents over which you have no control. The gap between what you could have bought (but didn’t) and what you can buy now can mean the difference between fe3ling able to buy a home and not. When the gap gets too big, you are “priced out of the market”.
Have you been patiently waiting for just the right house to come on the market? Let me suggest to you that it may not be forthcoming. It is very possible that while you watched the market last year, prices were getting primed for a rebound of sorts. It’s now underway and guess what? What you could afford a year ago is no longer possible today!
This is one time when waiting does not pay off!
Why do buyers wait when they might do better to jump in?
- they may be unrealistic as to what the market will bear (sometimes despite the statistics)
- they are cautious to the point of being unable to move forward
- they are listening to bad advice (at work, from friends etc.)
Want to be a home owner in the San Jose area? Hire a great agent, but then LISTEN to him or her! Pay attention to the stats (such as www.popehandy.rereport.com ) but remember that there’s often a lag time between what’s happening “in the field” and what’s apparent in the statistics.
If you need a reality check, go visit some open houses. Today some buyers of mine and I visited a few open houses in Cupertino. At each one, it was a zoo! So many people that I felt almost claustrophobic! (Seriously, I loathe thick crowds, and these were fairly bad.) I asked the agent about offers and was told, at one place, that although it had been on the market just 24 hours, they already had 4 verbal offers – or 4 offers coming – and 10 disclosure packets out. (Old rule of thumb: one offer for every 2 disclosure packages viewed. Not exact, of course!)
This is no time to fiddle and watch Rome burn. If you want to buy a house in Silicon Valley and have been sitting on the fence, this may be the time to get off and dive in. Talk to YOUR trusted Realtor for guidance as it’s not the same in Blossom Valley or South San Jose as it is in Saratoga or Monte Sereno or Los Gatos.
I’ve told my kids this: if I could, I’d be buying investment property right now. Fortunately, they are both in a great, private college and I joke that every time I get a paycheck, it goes to their university in SoCal – so no investment homes for me right now – but oh I wish I could!!
Will you be priced out of the market? I hope not. Check the stats, but talk with your trusted Realtor for guidance. Looking for a great agent? Give me a call and we can set up a time to chat in person or by phone.