Why should you buy a home in San Jose or the Bay Area rather than rent?
I provided a number of tips about how and when to buy on twitter
but would like to elaborate further below.
1. You should buy a home for the right reasons, regardless of the stage you are at in your life. I mean consider first and foremost your family needs here. Buying a home create roots and safety for your family. Buying a home also allows you to take control over your living space. Buying your own place provides stability in one's life. In other words, you are buying a house not just because you can afford it or because you want to build equity.
2. With interest rates stable under 5% (30y mortgage) and falling home prices (over 30% in San Jose), now is as good as a time to buy as any.
The benefits derived from waiting for home prices to bottom out could be offset by interest rates which will rise eventually mostly for macro-economic reasons (US credit rating potentially lowered and increase public expenses among other reasons). A friend of mine used to say, there is a price threshold at which you should sell and another one at which you should buy, based on your financial expectations both ways. If you anticipated to buy a house at a certain price because you feel this is the right price and you can afford it, go for it!
3. Buying in the right location is always the safe choice. To take an example, while real estate prices fell 30% in San Jose, homes prices only dropped 20% on average in Almaden and Willow Glen, which are some of the top neighborhoods of San Jose. Families will always shop for homes in those locations and, even in depressed real estate markets, the intrinsic value of a home will remain high providing schools keep their current API scores. Worse case scenario, if you cannot sell or if you need to move or buy smaller, you can always rent it out to cover your mortgage payments.
To wrap up this topic for now, the decision to buy or rent your home should first be based on lifestyle aspirations and secondarily on financial means. Just remember to be location-smart and forward thinking whether you buy or rent.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575