As a real estate professional, the discussion regarding affordability comes up often when a client is considering buying a home in the San Jose, Silicon Valley. The simple reality is housing of all kind is in great demand. Currently, San Jose has a less than 4% vacancy rate in the rental housing market. The demand is out pacing the existing supply and the current units being built. Looking at the projections int0 2015, “demand… is expected for 9,425 new rental units; the 1,950 rental units currently under construction will meet a portion of that demand.” In San Jose, the average rent for a 2 bedroom home is currently $2345 per month. Add another projected 4.7% increase in rent for 2015 and you will see that monthly rental rate $2462. And some renters are reporting higher increases than 5%.
So why not consider the option of buying a home? Potential home buyers indicate they are not sure they qualify to buy a home. The common discussion is around how much down payment is needed to purchase a home. Don’t let a lack of answers, keep you from becoming a home owner. Even if you believe you may need to move in 5 years due to a job change, there is definite possibility you might be better off buying than renting. The only way to know IF you can afford a home is to ask questions. Start with:
- Have you had a steady job for the last 2 years?
- Have you filed your tax returns over the last 2 years?
- Do you know your credit score? Is it 650 or better? (If not, improve it!)
- Do you have $15,000 – $20,000 in savings? In your IRA?
- Do you have a family member that can gift you $14,000?
- Can you afford $3000 a month in rent (even if you need to rent a room out for $1000).
- Would you like to increase your financial well being by potentially receiving an approximate $15,000 tax deduction per year?
- Would you like your “rent” (mortgage) to build you a projected 5% per year equity cushion; say potentially $100,000?
- Would you like to have a pet? Paint your walls purple? Not have to go to a laundry mat?
- Would you like to stop worrying about where you will live next year or how much your landlord is going to increase his/her wealth via your rent payment?
It is possible. It is most likely more do-able than you realize. Forget the naysayers and discuss your options with a professional. Over the last 10 years (remember- peak of recession 2009), I have helped my clients build their wealth through home ownership. This is not talk. These are real live cases of home owners, who lost money on their home during the recession and now have recovered and appreciated on average 5-10%. These are first time buyers who bought foreclosures in 2008 at 5% interest rate and now have 20% appreciation and refinanced into 3.75% interest rates. These are teachers, engineers, families, and singles, who sought out the answer to: “Can I?”.
My consultation will not be about pushing you into buying a home or purchasing a home that exceeds your means. My discussion will be about possibilities. Real information to help you decide the best for you. If renting is better for you, then you will know for sure. If buying could be a reality, you will have the facts on how to get there. If you have questions or want to understand more; contact me today. Here is a link to some home ideas I have for a first time buyer.