Those who have money to buy have been sitting tight for the past half decade.
Suddenly, everyone wants to buy real estate - first-time home buyers, investors, move-up, even move-down buyers.
What happened?
In the past four months inventories have fallen hard and prices have increased by $20,000 to as much as $100,000 on select properties. The bottom may have come and gone. It feels like recovery.
Silicon Valley bidding wars have erupted on everything from the worst distressed properties that attract all cash buyers because lenders won't finance their sale, to $2 million homes in Cupertino, Los Gatos, Palo Alto and affluent areas with a tech worker-based populace.
Many local markets have become much more seller friendly.
Asked one buyer from Germany, "Why did the market move so quickly?"
Interest rates are at record lows. Prices have stopped falling. The Euro Zone troubles are prompting investors from abroad to buy U.S. There is no one specific answer.
I'm exposed to all of the global and local information available to real estate professionals and the best answer I have heard is "The herd has moved."
Herd moving uphill
One of the fastest growing trends is move-up buys.
Home owners have been "sucking it up" and staying put, even through they have great jobs, tenure and steady pay increases. Now with this market surge, they are getting off the fence, selling mid-range homes, valued at $600,000 to $800,000 and buying up in the higher price range of $1 million to $1.5 million.
They are moving into long sought-after neighborhoods including, Los Gatos, Cupertino, Saratoga, Los Altos and Palo Alto.
They are married couples in their late 40's and realize that life is too short to wait much longer and they really can afford their dream home.
I recently sold a Cambrian, San Jose neighborhood home that had appraised at about $700,000 a year ago. Concerned about over-pricing that could have killed a deal last year, we conservatively priced it at $760,000. It sold for more than $800,000.
The sellers, in turn, acted fast and found a great home in Las Gatos for less than $1.5 million - an entry level property for this affluent city.
What kind of financing is attractive and available? It depends on the buyer. Do they hold shares of one of the hot fledgling tech companies and anticipate bonuses? Or are they on a fixed income?
One strategy is to get a conforming loan of $625,500 at a low, fixed interest rate under 4 percent and a second loan (Yes, they are back.) for $500,000 with an interest rate of 4.25 percent. For the down payment you'll have to have to use the equity in the old home you just sold.
There are also amazing jumbo loans for a full $1 million available for low interest rates and 5- 7- and 10-year hybrid adjustable rate mortgages are back.
This is a fantastic time to move up.
Life is short.
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Realty Times®.
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