I have been looking to purchase my first home for months. And I always ask myself that if this is a good time to buy now since the housing market is falling and also the foreclosures rate is climbing. But if you are looking for a house in those area with good school district such as Cupertino, Palo Alto, South Sunnyvale, West San Jose, West Oakwood Santa Clara, the housing market is pretty stable and some area are even climbing. And it will be rare to find a foreclosure homes in good area.
Here are the reasons that I believe it is a good time to buy now:
(1) Inflation
With the high inflation rate happening right now in United States, all the cost of materials to build a house is also actually rising sharply. After the market digested the foreclosure homes, any new construction will have to increase the selling price to compensate the higher cost.
(2) Interest Rate
It is pretty rare to have both low housing price and low interest rate happened at the same time. Recently market is expecting the Federal Reserve to raise interest rate to ease the risk of high inflation. There are a few possibilities for the future:
(a) Both housing price and interest rate drop
- Interest rate is very unlikely to drop further due to inflation.
(b) Housing price drop while interest rate go flat
- Possible. If it happens, it will be bad to buy now.
(c) Housing price drop and interest rate rise
- Possible. If it happens, buying now doesn’t hurt.
(d) Housing price go flat while interest rate rise
- Possible. If it happens, it is a good time to buy now.
(e) Both housing price and interest rate rise
- Possible. If it happens, it is a good time to buy now.
(3) Supply and Demand
To me, California is the best place to live in term of weather, cultural and also job opportunities. There are always more people moving into this area than moving out from this area. The land in bay area especially those areas with good school district are so limited. There is no supply but always with strong demand.
(4) US Currency and Globalization
With the weak US currency, more and more people from other countries will be able to afford a home in California bay area. China boom will also allow more and more Chinese to be able to afford US properties for their US life dream. California bay area is also one of their main choices.
(5) High Tech Jobs Opportunity
There are so many fortune 500 and startup companies in this area. I have been hearing that it will be easier to find a new job on the same street of your current company in bay area than find a new job in the same city in other cities. No matter how bad the job market is, bay area always offer better job opportunities.
No one can really time the market perfectly. To me, it seems to be a right time and I will go for it when I find one that I like. Wish me luck!
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