Thousands of Silicon Valley residents are crouched on the sidelines of the housing market, watching and wondering when to make a purchase or put a home up for sale.
And they’ve got questions: When will we hit bottom? Can prices in Cupertino keep going up? When will the mortgage market stabilize? To help, here is the Mercury News’ list of Top 10 Things to Know Right Now:
Some “micro-markets” are still hot, others very chilly.
Some houses in places like Saratoga, Cupertino and Los Altos are still selling with multiple offers for more than their asking prices, and few homes are for sale. Frenzied competition is reserved for homes in desirable school districts that are in good condition. Almaden Valley is pretty hot, too.
Yet other parts of the county, including the East Side and South County, have an enormous supply of homes for sale. Some neighborhoods’ values are being depressed by many bank-repossessed properties and “short sales,” in which owners try to sell for less than they owe their lenders, typically to avoid foreclosure. But some buyers are beginning to snap up bank-repossessed properties whose values have fallen about 40 percent from their peak.
Getting a loan can be an ordeal.
Lenders are lending. But they require more documentation, higher credit scores for the best interest rates, and sometimes more than one appraisal on a property. They frequently alter their guidelines about which loans they will fund, sometimes leaving buyers temporarily jilted. Start the loan process early; approach it with patience.
The “conforming loan limit” has not increased yet.
Within the next month or so, mortgage financing companies Fannie Mae and Freddie Mac will be able to back bigger loans, thanks to the recent economic stimulus bill. That may result in lower interest rates for local buyers and owners whose loans are less than $729,750, and it may spur more home purchases.
Many lenders have declared Santa Clara County a “declining market.”
Most lenders require borrowers to have bigger down payments to qualify for loans than in the past. Lenders don’t want to loan you 90 percent of your home’s value if they think its value is declining. They fear if the value keeps dropping, you’ll default and leave them with yet another repo on their books.
Even refinancing takes longer now.
Cutbacks at banks and escrow companies mean there are fewer people to speed along your loan. Approvals that used to take 48 hours now can take five or six days, some mortgage brokers say.
There are deals to be had.
Even in the few hot markets, you can find good values on properties that aren’t picture-perfect. Most buyers these days want “move-in” condition. Buyers willing to clean and repair can save money. Some bank-owned properties are bargains, but not all. Banks want to get what they think is “market value,” and may be slow to recognize if value has fallen. They can also be slow to accept offers.
Buying a “short sale” home can be a pain.
Getting approval from the lender to buy a home for less than the owner still owes on his mortgage can take weeks or months. In the midst of the process, the lender on the owner’s first or second mortgage may decide to foreclose after all, scuttling your purchase. Patience – and an experienced real estate agent – is required.
Buying at an auction doesn’t guarantee a bargain.
Big auctions can breed excitement, and excitement makes people bid higher. Inspect the property first, determine what it’s worth, and don’t bid more than that.
Most “move-up” buyers today should sell before they buy.
It’s hard to know how much you’ll make on your home until you’ve received a purchase offer from a buyer who has locked in a loan. So it’s probably unwise to make an offer on a new home unless you’re paying in cash, or you make an offer that’s contingent on the sale of your existing house. You can try to get a “bridge” loan allowing you to pay the mortgage on both homes for a time, but rates are high and criteria stringent.
There’s help for first-time buyers.
Non-profit organizations and government programs can help even those with small down payment savings, and timing is good because entry-level prices are dropping. For programs that may help, visit the California Housing Finance Agency at www.calhfa.ca.gov, Neighborhood Housing Services at www.nhssv.org or South County Housing at www.scounty.com.
Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.
