You've heard about subprime mortgages and the bursting of the real estate bubble. Although it's not doomsday, it sometimes feels like the real estate market is collapsing from under us. Although the news makes many people scared to buy a home, the reality is that with a little homework, now is one of the best times to buy a home. With the general downturn in the real estate market, many homes are becoming more affordable. Where you used to find 10 or more bidders on a home, you may now be the only person. Although the San Francisco Bay Area is one of the locations that seem to be unaffected by the general real estate downturn, there are still great deals to be found.
Within the San Francisco Bay Area, there are several markets that are generally seen as being overpriced. These areas include Palo Alto, Fremont, Cupertino, and certain areas of San Jose. The main culprit of this over valuation is due to school districts. Families with children more often concentrate on purchasing a property that allows their children to attend a prestigious public school. This will in turn drive up the prices for potential homebuyers, especially first-time home owners.
There are many other areas that have fabulous homes, with much more "reasonable" Bay Area prices (let's be honest, no real estate in the San Francisco Bay Area is really reasonable). These include cities such as Belmont Hills, San Carlos Hills, Redwood City, and San Mateo Hills. Although many of these cities look very industrial off highway 101, if you venture further inland west of El Camino Real and before highway 280, you will often find a wealth of well manicured, distinctive homes that sell for a vast discount of their more overpriced counterparts in Palo Alto, Fremont, or Cupertino.
Even if you do seek a home in markets which have appreciated significantly over the past few years, you will find far less competition for these homes compared with just a year or two ago. Combine fewer buyers with more homes on the market (and perhaps even a motivated seller), and you may find yourself moving into a home you couldn't afford two years ago.
Outside of the core San Francisco Bay Area in markets such as Sacramento, Fresno, and Tracy, be aware these investor driven markets are experiencing a huge correction in prices. You will often find great deals, especially on new homes. If you choose to buy a home in this area, you will see incredibly low prices, but keep in mind you may have to wait longer for a real estate market upswing to affect these areas.
With interest rates at a historic low and a larger and larger inventory of homes coming on the market, it's now a buyer's market, and one of the best opportunities we've seen in many years to purchase a home.