The Silicon Valley Association of REALTORS®, a professional trade organization representing over 4,000 REALTORS® and affiliate members engaged in the real estate business on the Peninsula and in the South Bay, gives five reasons why if you have good credit, a stable income and plan to live in the home for a long period of time, current market conditions offer you an opportunity of a lifetime.
1. Housing has become more affordable.
"Affordability has improved greatly in a year's time." According to SILVAR president, Julia Truesdale Keady. "Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels."
Keady cites a release this week by the National Association of REALTORS® announcing NAR's Housing Affordability Index rose 0.9 percentage points to a record high of 173.5 in February from January, and is 36.3 percentage points higher than a year ago. A median-income family earning $59,700, could afford a home costing $285,600 in February with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest.
She also notes California Association of REALTORS® recently indicated the percentage of households that could afford to buy an entry-level home in California stood at 59 percent in the fourth quarter of 2008, compared with 33 percent for the same period in 2007. The minimum household income needed to purchase an entry-level home at $248,030 was $48,900, based on an adjustable interest rate of 6.02 percent and assuming a 10 percent down payment. The monthly payment including taxes and insurance was $1,630.
2. There's a larger supply of homes on the market, so buyers have stronger negotiating power.
Inventory is up, which means buyers have more homes from which to choose, and with that comes more negotiating power. Data from MLSListings Inc., SILVAR's Multiple Listing Service, shows inventory in Santa Clara County has increased from 4,793 homes in January of this year to 5,125 in March.
"This is a good thing for buyers. Bargain hunters are more likely to find a good deal when the supply is ample," said Keady.
3. Interest rates are still at an all-time low, with loan programs available for buyers.
Home prices have come down, and interest rates continue to be at an all-time low, with many loan products available. FHA, for instance, has now become a viable option for homebuyers in California, with only a 3 percent down payment requirement. In many areas, the discounted sales are already triggering multiple offers, said Keady.
4. There are very good federal and state incentives.
The economic stimulus plan has raised the federal tax credit for first-time homebuyers to 10 percent of the purchase price of a home, or a maximum of $8,000 for homes bought between Jan. 1 and Nov. 30 of this year. That money will not have to be paid back if the home is not resold for at least three years. In California, first-time homebuyers are allowed a $10,000 tax credit on the purchase of homes that have never been occupied.
"With interest rates so low and these other great incentives, including the tax advantage of the mortgage interest deduction, now is a perfect time for first-time and even repeat buyers," said Keady.
5. There are social benefits to owning a home.
Studies show neighborhoods are enriched with more community involvement from homeowners, since they feel they have more at stake improving their neighborhood. Children, too, perform better in school because of the added security homeownership bring to a family.
"Sure, there are the usual tax incentives to owning a home, but you can't put a price on the social benefits families and communities derive from living in a home," Keady said.
Keady advises buyers to seek the advice of a knowledgeable REALTOR® regarding local market conditions, as well as rules of the various incentives and programs available for homebuyers. To find a REALTOR® in Silicon Valley, visit www.silvar.org
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.