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Should You Rent or Buy Your Next Home?

Posted on August 3, 2018 in Bay Area Real Estate by Ninja Movers Leave a comment
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Image CC BY-SA 3.0, via Image Creator, by Nick Youngson – rent or buy

The Bay Area housing market is one of the most expensive in the nation, and if you are in the middle of looking for a place to live, one of the most frustrating. You have two choices: rent or buy. Either you can commit yourself to 30 years in a house that could lose value, and will certainly need maintenance, or you can rent and let your landlord build equity. Both options have their ups and downs, so is renting or owning right for you?

Are You Financially Prepared to Buy?

The first thing you want to ask yourself is whether you actually do have the option. Can you afford 20 percent downpayment in a market where houses can easily top $1 million? Another option is an FHA loan, where you only have to come up with 3.5 percent, but know that you’ll have to pay mortgage insurance, which adds between .5 percent to 1.75 percent to the cost of the loan.

Ironically, if your credit is iffy, you might have better luck buying than renting. An FHA loan requires a credit score of 580 and above. If you can shell out a 10 percent downpayment, you could qualify with a score that’s even lower.

Naturally, things aren’t as clear cut when you rent. In a competitive rental market, landlords can afford to be picky. You might qualify for a rental with a less than stellar credit score, or the landlord could rule you out based on just a few late payments. If you aren’t sure whether you’re financially prepared to buy, Trulia has a handy calculator.

Is it the Right Time to Buy?

Credit score and downpayment shouldn’t be the only factors in your decision. Real estate markets, like all markets, go in cycles. Over the last few years, real estate has boomed, but there’s a chance we could be in for a bust soon. If you’re planning on staying in the house for a while, and you’re job is secure, buying still might be worth it. Historically, real estate prices always recover, making it a good long-term investment. If, however, you plan on staying less than three years, you could take a big loss if the market goes south. Three years is about the amount of time it takes to begin building equity, at least in a stable real estate market.

Of course, there’s more to the decision about whether to rent or buy than financial. If you want your home to be yours; you want to paint and renovate at will, you should buy. If you value freedom over a solid home base, then rent.

Featured Image CC BY-SA 3.0, via Image Creator, by Nick Youngson, found on The Blue Diamond Gallery

Bay Area Real Estate Is Crazier Than Ever — How Do You Win A Bidding War?

Posted on September 18, 2017 in Bay Area News, Bay Area Real Estate by Ninja Movers Leave a comment
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Earlier in the month, news broke that a house in Sunnyvale sold for almost $800,000 over the asking price. It was a modest, by middle Americans standards, three bedroom, two bath house. The house is only about 1,200 square feet, which is less than half the average American home. It caused a bidding war and next thing anyone knew, it sold for $2,470,000, which was $782,000 over list.

What is a bidding war?

Bidding wars have become the norm in California real estate. Savvy real estate agents often intentionally list homes on the low end, hoping to encourage bidding wars. The tactic works. That Sunnyvale home had 15 offers, seven of which were from people who worked at either Apple or Google.

It’s not just Silicon Valley. When we bought our East Bay home, we lost several properties to bidding wars, and ultimately to cash offers, before settling on our “needs a little work” choice.

Can a regular person win a bidding war?

If you are an executive at Google or Apple (or at any number of tech firms), you might not have a problem, but for those of us who have solid middle class incomes, a low down payment and good credit, is there a chance?

While it is tough to compete with billionaires and those with all-cash offers, there are ways to help boost your chances. Here are some tips from CNBC:

  1. Get pre-approved and pull together some cash — Sellers don’t have the patience these days to deal with uncertainty. They want to know that any offer is set in stone, so make sure you are pre-approved for your loan and try, if at all possible, to put down at least 20 percent.
  2. Be quick — In a hot housing market, look at the hunt as a second job. Don’t rely on just your realtor. Drive your desired neighborhoods and religiously scan Realtor.com for new listings. Try to schedule immediate viewings. The goal is to be the first offer.
  3. Include an escalation clause in your offer — Ask your real estate agent to include an escalation clause that will allow you to top other offers, up to your desired upper limit. The clause, if properly worded, will raise your offer to just above the highest current bid. For example, if you list your highest bid at $500,000 and the current highest offer is $480,000, your official bid will be about $481,000.
  4. Inspection — While nearly every expert recommends that a homebuyer have the house inspected, in a seller’s market, it could disqualify you. Instead, CNBC recommends that you go ahead with the inspection before making the offer. You will have to pay for it, but the seller will be happy to know that you won’t back out because of previously unforeseen problems with the house.
  5. Charm the sellers — Unless your seller is just an investor, they have invested a decent portion of their lives in that house. Sure, they want to maximize their profit, but they also want to know that the house will be loved. Send them a house love letter (your agent can forward it). Include pictures of your family.
  6. Remember it’s not just about winning — Winning a bidding war is great, unless you don’t really want the prize. Spend some time in the neighborhood. Check out the schools. Also have your agent check “comps” or comparable sales to make sure you aren’t overpaying for the home. As tight as our housing market is, it’s still better to rent than to dramatically overpay for a house you didn’t really want.

What To Do If Your New House Has A Bunch Of Hidden Problems

Posted on September 1, 2017 in Advice, Real Estate by Ninja Movers Leave a comment
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With our housing boom, home buyers don’t have a lot of clout in today’s market. Unfortunately, to purchase a home, many buyers have to forgo protections like home inspections before purchase.

That doesn’t mean that if you don’t have an inspection, you have no rights. In most cases, it is the seller’s obligation to disclose major problems like with foundations, roofs, mold and pests. If a seller neglected to tell you about a major problem, you might be able to sue, but you might not.

Home sellers are required to give truthful information about home defects they know or should have known about. Most states, including California, do require home sellers to complete several disclosure forms describing their homes’ general condition. Home sellers can never deliberately withhold from potential buyers knowledge about their homes’ condition that could later pose problems, such as lead paint or termites. However, homes in states such as California are also presumed to be sold “as-is.”

Source: SF Gate

Even if your home purchase was an exception to the disclosure low (such as a foreclosure, a family transfer, a judgement, etc.), you can ask the seller to fix the problems, although you could risk them saying no and you could risk them rejecting your offer.

The best tactic might be to hire an inspector anyway. Factor anything the inspector finds into the offer, even with the competitive market. If you can’t afford to fix a home’s major problems, it’s not the home for you anyway.

Another tactic is to wait on what you can. If the roof still has a couple of years on it, or if the plumbing only clogs occasionally, you can gamble that the real estate market will continue to rise and that you can take out a home equity loan to fix the problems. If, however, the safety and integrity of your home is at stake (such as with foundation or electrical issues), it may be best to move on.

If you’re already living in the home, though, you are probably stuck because in California, homes are sold as-is. If you sell, you will have to disclose the problems to future buyers though. Some repairs might be delayed by hiring a handyman. For example, a foundation issue might just need a French drain. A roof might just need patches, as might some pipes. Even electrical issues could have bandaid fixes, but be careful.

Bay Area Named The Worst Rental Market

Posted on April 17, 2015 in Bay Area Real Estate, Real Estate by Ninja Movers Leave a comment
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Featured image via Wikipedia.

Featured image via Wikipedia.

It probably doesn’t surprise most of us to live here, but if we rent, we are paying out the you know what for just rent. If we own, we’re paying even more. At least those are the findings of Forbes’ annual ranking of rental cities.

The worst city for rentals, according to Forbes, is San Francisco. On average, renters pay $2,800 a month and their rent increases almost 13 percent a year.

MSA: San Francisco-San Mateo-Redwood City, CA Metropolitan Division

Average monthly rent, Q4 2014: $2,802

Year-over-year % change in apartment rent: 12.8%

Median houshold income, Q4 2014: $85,087

Avg. rent as a share of household income: 40% Apartment vacancy rate, Q4 2014: 3.6%

Average monthly mortage payment, Q4 2014: $5,851

Mortgage payment v. rent: $3,049 cheaper to rent

Right behind San Francisco on the “worst” list is Oakland.

MSA: Oakland-Fremont-Hayward, CA Metropolitan Division

Average monthly rent, Q4 2014: $1,815

Year-over-year % change in apartment rent: 10.5%

Median houshold income, Q4 2014: $76,493

Avg. rent as a share of household income: 28% Apartment vacancy rate, Q4 2014: 2.9%

Average monthly mortage payment, Q4 2014: $4,182

Mortgage payment v. rent: $2,367 cheaper to rent

Right behind Oakland is San Jose.

MSA: San Jose-Sunnyvale-Santa Clara, CA Metropolitan Statistical Area

Average monthly rent, Q4 2014: $2,291

Year-over-year % change in apartment rent: 11.3%

Median houshold income, Q4 2014: $93,902

Avg. rent as a share of household income: 29% Apartment vacancy rate, Q4 2014: 3.5%

Average monthly mortage payment, Q4 2014: $5,050

Mortgage payment v. rent: $2,759 cheaper to rent

Believe it or not, New York is behind even San Jose. Their average monthly rent is a bit higher than San Francisco, at about $3,300, but the annual increases are much lower.

METRO (Not an MSA): New York County (NY)

Average monthly rent, Q4 2014: $3,290

Year-over-year % change in apartment rent: 3.4%

Median houshold income, Q4 2014: $74,915

Avg. rent as a share of household income: 53% Apartment vacancy rate, Q4 2014: 2.3%

Average monthly mortage payment, Q4 2014: $7,917

Mortgage payment v. rent: $4,627 cheaper to rent

Rounding out the bottom cities are Los Angeles, San Diego, Northern New Jersey, Boston, Orange County, California and Palm Beach, Florida. I guess we should be happy that California has “only” six of the 10 worst rental markets.

Of course, there’s a reason our rental market is so tight – everyone wants to live here. We have the best weather, the best companies, but biggest variety of recreational activities and the best people.

New California Program For First Time Home Buyers

Posted on September 9, 2013 in Real Estate by Ninja Movers Leave a comment
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If you are looking to buy a home, but are finding the down payment requirements a little daunting, there may be some assistance available to you through a new program in California.

The California Housing Finance Agency (CalFHA) is offering a new fixed-rate mortgage program with no-interest down payment loans for first-time home buyers. The best thing about the loan is that you don’t have to pay it back till you either sell your house, refinance it or pay it off.

The loan is capped off at 3.5 percent, which is the minimum down payment amount for an FHA loan. Further assistance might be available through the California Homebuyer’s Down Payment Assistance Program, which can provide up to an additional 3 percent of the home’s value.

Still, with median home values in the Bay Area capping half a million dollars, first time home buyers might not be left with a lot of options.

But that doesn’t mean you’ll be out in the cold. As median real estate prices in San Francisco have now risen above $1 million, city renters are fleeing across the Bay where prices might not be that much cheaper, but you get more space for your buck.

Christine Englund and Dean Charlton migrated from the city to the East Bay because she got a dream job in San Ramon.

“Our house in West Portal is in one of the foggiest neighborhoods in town; 2 miles up from the ocean, you’re totally socked in for the summer,” Englund said. “It’s a two-bedroom one-bathroom, with a little yard, just 1,500 square feet.”

Listed at $799,000, the house got 12 offers and sold in late May for $1.025 million. “We hit just the right time,” Englund said. “Interest rates were still a bit lower than now and inventory was so tight in San Francisco.”

Source: SFGate

You can get even more bang for your buck if you move to less family-friendly, but economical parts of Richmond or Oakland.

San Francisco on its Way to Being Most Expensive Real Estate in U.S.

Posted on July 16, 2013 in Uncategorized by Ninja Movers Leave a comment
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Throughout the country, the economy is improving, but it seems that in many ways, the Bay Area is leading the country. According to reports, the real estate values in the Bay Area will be seeing double digit spikes over the next year.

A recent forecast from real estate analytics firm Veros predicts that residential real estate prices in the San Francisco and East Baymetropolitan areas will spike an average of 12.7 percent by June 2014. The company attributes the projected increase to the region’s low unemployment rate and scant housing supply.

Veros also forecasts robust growth for the Los Angeles and San Jose metropolitan areas, which placed second and third on the list with expected price gains of 11.6 percent and 11.1 percent respectively. The news comes less than two weeks after the California Association of Realtors announced that home-price gains in the state reached highs not seen since 1980.

Source

According to reports, by this time next year, the Bay Area will have pretty much recovered from the real estate crash and may be on its way to property values above those at the peak of the bubble.

Part of the rise in housing prices might be due to an international influx. From 2005 – 2009, about 71,000 people moved to the Bay Area from other countries.

Some experts are concerned about the rapidly rising housing prices. The double digit rises in property value are reflective of the the early 2000s, before the crash. Credit requirements have tightened but mortgage derivatives (where mortgages are sold to investors in blocks) are still being sold with few or no regulations.

Still, it’s a great time to be a homeowner in the Bay Area. The job market is strong. We have one of the most highly educated population in the world and of course, the weather can’t be beat.

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