Here’s my honest, fact-based advice for first-time buyers in our market.
By the end of September, national news about the housing market seemed chock-full of mixed messages; as we head into the home stretch of 2020, some are claiming we’re on the cusp of a massive collapse and slowdown, while others report that it’s a fantastic time to buy a home. What are first-time homebuyers supposed to make of things? Let’s break through the noise by reviewing the facts about our 2020 San Diego County market.
In spring, when we went into lockdown and people began losing their jobs, the expectation was that the housing market would sink titanically. That, of course, didn’t happen. Interest rates have been sustainably low—the lowest I’ve ever seen in my life! I’ve seen loans close at 2.5%, which would dumbfound anyone from just a few years ago when people thought rates couldn’t dip below 4%. Our current record-low rates have helped the market maintain a fast pace by stirring demand.
If you’re a tenant who’s hungry for homeownership but unsure what to do in this unusual market, the answer is simple: Weigh the numbers, weigh your priorities, and do whatever you feel is right. If you’ve been paying $2,000 or $3,000 a month in rent and have been a renter for three to five years, that means you’ve shoveled over $50,000 or $60,000 into your living accommodations with nothing else to show for it—no tax deduction, no equity, no asset.
You could consider buying something similar to the space you’re currently renting, but don’t focus too much on the purchase price. Instead, look closely at the monthly payments; if you’d feel comfortable with paying $2,500 or $3,000 a month, then, with the lowest interest rates available, you’d be able to secure a $500,000 to $550,000 property. That would give you a fairly decent home in San Diego County. If you’re willing and able to spend a little more (around $650,000 to $700,000), then you could get yourself a home in one of the nicer, highly coveted San Diego neighborhoods.
“Weigh the numbers, weigh your priorities, and do whatever you feel is right.”
As summer gave way to fall, our housing inventory continued its disappearing act and homebuyer woes worsened; right now in San Diego County, we only have about 3,600 to 3,700 homes available for sale (this number only includes detached homes, twin homes, condominiums, and townhomes). At the same time, we had about 4,200 to 4,500 pending homes at the end of September. There’s no doubt about it: Getting a property under contract has been a real challenge.
Thankfully, there are quite a few tips and tricks that I’ve learned in the last 10 to 12 years of my real estate career, throughout which I’ve sold more than 300 homes. Now, in this tight seller’s market, I can finally put these home-buying strategies to work for my clients and close out the transaction on the home they’ve always wanted.
If you’re serious about buying soon, the first step is to contact me or my team for our free, no-obligation, no-gimmicks buyer consultation. The purpose of this meeting, which can be conducted over Zoom or in person, is to inform you of the entire purchase process, step by step—the disclosures, financing options, contract negotiation, out-of-pocket costs, and typical timelines.
Recently, we’ve been having a lot of success for our buyers by shortening the time frame allotted for the appraisal contingency and/or the home inspection contingency; at times, and with great care, we’ve even waived the appraisal contingency altogether, and this approach has greatly helped our buyers’ offers get accepted.
Waiving contingencies is risky, but in a more detailed one-on-one conversation I can explain why it’s really not as risky as you’d think—it’s a very calculated practice. If you’re ready to have that chat and break ground on your homeownership dream, or if you simply want more information on our market, please reach out to me by phone or email anytime. I’m always here and ready to assist you.
