Try And Try Again - A Home Buying Tale

Try and try again...

The market "has softened", or the market "has slowed down".  Or has it?

I was just hearing MarketPlace on NPR yesterday afternoon saying that the market was going to have a renewed jump in activity soon, with more multiple offers than we even had lately, due to lack of inventory and very low interest rates.  Whether this comes true or not, we will see.  But these stats below tell the tale of California home buyers and their successes, ...or delays during the 2nd quarter of this year.

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Truth be told, in the SF Bay Area, whether the market has slowed down or not depends a lot on the exact area, the type of property, the time of year and also... the asking price.

For instance for well-priced properties in Palo Alto, or towns with good schools, the activity is still quite brisk.  For smaller homes like condominiums in areas where there is more inventory (i.e. some areas in San Jose or Santa Clara, or Sunnyvale) prices have certainly come down from the highs of last year.  It is all a question of knowing the market.  A qualified buyer's agent is a must to make sense of all this, someone who carefully evaluates the home value and the recent sales before placing an offer, above or under asking price.  It will depend on the condition, the location, the local inventory for the particular home you are considering.

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Thank you,

Francis

Home Valuation tool

Detailed, local trends etc...

Current mortgage rates   - low, with some volatility.

Automated valuation systems in real estate

Countless are the times when clients tell me that they believe the value of their home is “X” because Zillow or another automated valuation system on the internet said so. 

Automated home value estimates have been a popular tool for real estate search websites, and while these tools may satisfy clients’ needs for quick information, in many cases the information they provide is inaccurate.  Although many agents and brokers are aware of the limitations of these models, many consumers are not, and improper use of these tools can encourage mistakes.

Automated valuation models (AVM) are designed to predict a home’s price based on comparing it with similar properties in the area. They do this using county property record data from thousands of offices around the country, comparing several attributes such as square footage, the number of bedrooms and bathrooms, and other property features. This data cannot take into consideration the specifics of the neighborhood or the details of the properties (lot size, improvements, quality of the maintenance…).  It is my experience that while they can be a good first indication, and sometimes accurate, they miss the mark in roughly 30% to 40% of cases.  Where all homes are similar, like in a condominium complex or a given tract of identical homes, they may be quite accurate.  In places where each home is unique, in nature or in location, they can be quite off (think: Los Altos Hills, or Palo Alto to cite a few). 

As always with statistical data, a percentage of the evaluations will be accurate – but be careful it is not by mistake.  Also, figures do not know the market conditions, which can only be understood by a professional dealing with local sales 24/7.  I do not mean to be critical, but I just want to remind clients that these valuations should just be a first indication, not the final opinion of value.  Another way to look at it is, as we like to say in the business, "home valuation is not an exact science".

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Thanks for reading,
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates