Many of my clients here in Silicon Valley are highly analytical and risk averse, so want to proceed cautiously, and slowly, with home buying. Unfortunately, when it’s a hot seller’s market, as it is today in and near San Jose, a long delay in buying can mean higher costs, or worse, getting entirely priced out of the market.
I know first-hand, because I did this myself in the late 80s when purchasing my first home. The situation was similar. It was a crazy red hot seller’s market. Every turnkey home (there weren’t many on the market at all) got multiple offers and massive overbids. Competitors with the largest down payment and the easiest terms for sellers beat my husband and me out over and over. We set about to “power save” and boost our downpayment to be more competitive. But prices rose faster than we could save. Finally, we broke down and accepted help from my parents in the form of a loan, and we settled on a house that wasn’t really turnkey (and not nearly as nice as what we could have bought 2 years prior). Looking back now, I believe the amount lost due to our delay in acting decisively was probably equal to between 10 and 20% of our purchase price. Homes had risen in value that much! And it is happening again.
If you wish to purchase a home in Los Gatos, or anywhere in Santa Clara County, it’s very expensive to take your time. For instance, most properties in here are selling for about 20% more today than a year ago. Again, that’s the down payment! Add to that the rising interest rates and you are getting squeezed on both ends.