Real Estate Roundup with Sharon Alva: Reality check
With the recession and the drop in prices, buyers feel (and rightfully so) that this is their chance to get a great deal on a house. But this being the Bay Area, I am often in the position of bursting bubbles. Because even a good deal may not be affordable.
This maybe obvious but bears repeating:
You cannot buy a 1,400-square-foot, three bedroom/two bath house with a yard, not on major street and preferably with a fantastic view, that is a cosmetic fixer, using an FHA loan, where the house has charm and great layout, in a safe neighborhood for under $300,000.
Not in Alameda. Not in Oakland, and not in Berkeley. Not even in San Leandro (in case you thought that would be a good fallback position). Now go define safe neighborhood! It’s a very personal choice. But that’s the challenge clients come to me with every day.
Something’s gotta give. Is it neighborhood? Maybe a condo and not a house? Maybe it’s got to be an itty bitty house first time around. Maybe it has big structural issues and the buyers will have to forgo any luxuries for the next few years in order to fix it up. Maybe two of these factors.
I encourage buyers to look at things in their price range. If you don’t like what you see, look at spending more. If that’s not possible, not desirable, or neither affordable nor desirable, than change your parameters. Asking for the same parameters in the same price range even after repeated failure is like banging your head in the wall.
I do feel your pain. Prices remain high in the Bay Area. Thinking that asking for a house in a less coveted neighborhood in Oakland or Alameda is the way out may not be satisfying, since prices are relatively high even in those areas. The compromise a buyer has to make may be bigger, and more painful, than anticipated.
The lower prices set by those selling homes in short sale situation or foreclosures seems like it is mocking the buyer who is out there looking for a bargain. Beneath every super-low price are multiple offers. The buyer may not even see that a property has an accepted offer at a much higher price than that showing in their online search because the short sale process is long, and it looks like the property is still active when in fact 12 offers have been received and the bank is slowly going through its process with a chosen offer.
Have your agent look at homes sold in your chosen neighborhood. Those are the only true indication of what the market price really is, and your agent, who is out there every day, knows the selling-value of properties in the area where you are searching.
I don’t want to dishearten anyone, since I think this is a phenomenal time to buy and good deals are out there to be had. But the good deals are relative to the area we live in. And the future value of the purchased property will reflect that same reality. You, me and the folks competing with you for that great deal all want to be here and nowhere else. The Bay Area, after all, is Nirvana – with a price to match.
Sharon Alva is a real estate agent with Alain Pinel, living in Alameda. While Sharon has been known to perform real-estate miracles, she has not been able to find a 1,400-square-foot, three bedroom/two bath house with a yard, not on major street and preferably with a fantastic view, that is a cosmetic fixer, using an FHA loan, where the house has charm and great layout, in a safe neighborhood for under $300,000. You can reach her at firstname.lastname@example.org.