June 5, 2007

Today’s Real Estate

Definitely a buyer’s market, but...

By Donna Nardi
Special to the Times

A couple of years ago, sellers could pretty much name their price for their home. If they priced it low, buyers would bid the price back up, and often higher. The only obstacle was the lender because appraisals were often too low.

The buying frenzy was not a gift to those of us in the real estate business, particularly those of us who worked with buyers. Often buyers, after experiencing the pain of getting their hearts set on a particular home, submitting an offer and losing to a much higher bid again and again, became gun-shy, and pulled completely out of the market.

Many of those same buyers are still sitting on the fence today, waiting for the market to decline, prices to fall and to snatch that “great deal.” Negative media attention regarding sub-prime loans has created an even greater hesitancy. Never mind the predators out there. In a word, many buyers are scared.

Knowing human nature, fear most often comes from the unknown. So, let’s shed some light on the subject, and see if we can dispel that fear.

First, let’s look at why we purchase a home. Yes, it’s a great investment for today and the future. More than an investment, however, it’s a home, a place to enjoy, dream, make precious memories and live for years to come. While we must be concerned about finances, and paying the monthly mortgage, we need to begin looking at homeownership as a lifestyle, rather than only as an investment. Yes, there are fabulous tax breaks, equity earnings, no question. This home will also help us to grow “up” to our next home. Nothing compares to this investment for your retirement years, and allows a variety of choices for those golden years.

So, let’s look at the how. Of utmost importance is finding the right lender who will look out for your best interests. Yes, there are those that have little concern but their own pocketbook. But, there are many lenders that truly do care about their clients.

Doing your due diligence in seeking out the right lender with the right loan for your family is a must. Ask family, friends and neighbors who they used and if they are happy with that lender years later. Your Realtor should also have lenders they partner with. This lender should listen carefully, educate, offer several loan options and help you to make an informed decision. Determining lifestyles and future plans are critical in choosing the best loan. Also of great importance is finding the right realtor for your needs. Again, due diligence is of great importance.

The when is now. While it is understandable that an individual needs to have their finances in order to proceed toward homeownership, it is a losing proposition to wait for the market to get “ready” for you. The “bubble” is not going to burst—not here in the Bay Area, for sure. The jobs are here, the climate and desirability are here. Immigrants continue to come for jobs, bringing their housing needs with them. All these elements will continue to buoy the housing market for many years to come. Data shows that waiting can cost you—and cost you big over the life of the loan, if the interest rates go up even slightly.

The next question to consider is what, especially where first-time buyers are concerned. Current homeowners have more buying power and leverage because they generally have plenty of equity in their home. But first time buyers must accept the fact that their first home is a start.

Notice the word start. Your first home likely won’t be your last. Unless there is a windfall of money, first-time buyers generally must start small and move up as their life-style and finances require and permit. You may live in a condo for a time, which may not be your first choice but gets your into the market and allows future leverage.

Your starter home isn’t a negative—it is a wonderful turning point in your life. After all, you’re a homeowner now! Do everything possible to make your home your very own and shine with pride. But, given time, the earned equity and improved finances will allow you to move up to a bigger home.

When determining which property to buy, take the time to write down what you can’t live without, what you must have, what can be changed and what can’t be changed. For example, you can’t change the location, the “bones” of the house, or the general floor plan without a major remodel.

According to the National Association of Realtors, the benefits of homeownership go way beyond a great investment for our dollar. Research shows benefits in the following areas:

Higher education

Lower community crime rates

Lessened welfare dependency among households

More household participation in civic affairs

Better household health

Overall, a better and higher quality of life comes with homeownership.

So, while we should be concerned with our financial health and risk-taking, we shouldn’t neglect the best investment available here in the Bay Area, and that’s our home.

My hope is that by shedding light on these areas, the fears buyers are facing will begin to be alleviated to usher buyers to homeownership. Why wait, when you can begin to enjoy your own home and earn equity sooner, rather than later?

Donna Nardi is a Realtor, Accredited Staging Professional, and Senior Real Estate Specialist with Prudential California Realty in Willow Glen. You may reach her at (408) 918-4410, or donna.nardi@prurealty.com, or www.HappyWayHome.com.