We’re a few weeks into seriously starting to look at the Bay Area housing market (as in actually going to open houses and going on trips with our real estate agent to get to know neighborhoods).
Although we’re starting to get a bit more accustomed to prices of houses in the area, I still can’t get my head around the idea that a basic 3bd/2ba house will likely cost nearly $1M. These are houses that would run in the low hundred thousands anywhere else, let alone in Tennessee, where I spent most of my childhood.
We’re basically looking for a solid house that will retain (or possibly even appreciate) in value over time and that doesn’t involve an unreasonable commute time to my work; nothing fancy, and we don’t even care if it’s new, although not having to cross the Bay every day would be nice.
Here’s what I’ve been able to pick up so far from our trips:
- Now that we have a little one, school districts are a factor, but from what I’ve been able to tell, people around here pay either a few $100K extra for a house in a good public school district or the same amount for a private school education in exchange for a lower cost house located in a worse public school district. This trade-off happens in other places in the US too, I suppose, but the amounts involved here are just incredible.
- In some areas, one house that’s priced at $600K (a fixer-upper, as in unlivable condition at move-in) could literally be next to others that are north of $2M.
- There are these things called “short-sales” that appear to be good deals but whose sales (at least in this area) are seldom completed or completed in any reasonable amount of time. It seems like every time we find a decently priced house on Redfin, it’s listed as a short sale. In short sales, the seller still owns the house, but owes more on the mortgage than he or she can get from selling the property. In many instances, more than one bank holds a mortgage on the house and each one must approve the sale in order for it to go through. Moreover, there are usually multiple bids on the property (including some with all-cash offers). The advice I’ve heard is that should we find a house we like on a short-sale, we ought to make a bid and then continue seeing houses because the likelihood we would get the house is next to nil.
- Then there’s the mortgage….the various flavors of mortgage loans are an area we’re still learning about. We’ve been talking to a loan broker and asking all sorts of questions. I never realized how complex mortgages could get (jumbo loans, FHAs, points, you name it).
Because of where we live (close to Silicon Valley), there are probably more people willing to forego the use of an agent or a loan broker and instead head straight to Redfin. We are content with the agent we have so far, but it’s interesting to see how many different ways there are to go about finding a house to buy.
Despite the sticker shock, I have to say that it’s been somewhat fun looking around and seeing if we can picture ourselves and our family living in the houses we’ve seen. We’re currently renting a house and have until next March, so at least we aren’t on a tight deadline. Still, I sometimes wonder if we will ever get to the point where we find something we like enough to pull the trigger on signing a HUGE mortgage. Our agent claims that the day we find our house, we’ll know it even before we walk in. I personally find that hard to believe, having never had that feeling about anything I’ve purchased, let alone a house.
What’s been your experience, and what advice do you have for a first-time home buyer? I’d be interested in hearing people’s advice, whether you’re in the Bay Area or not!