Is It Right Time To Buy Home In The Bay Area?
In the San Francisco Bay Area, 2020 and beyond is an excellent time to buy property. 2018 was the peak of real estate prices in the SF Bay Area. Specifically, San Francisco 's median property price decreased by 11.5 per cent from its peak in early 2018.
What's nice is that you haven't bought it since the summit of 2018 at least! The average home price decrease of 11.5% is substantial. This is a 56% decrease in the downpayment value of 20%.
In the last housing crisis of 2008-2009, SF Bay Area's immobilization decreased by approximately 15 percent and then erupted for a number of years.
In 2020 and beyond, land in the SF Bay Area should be a reasonable investment for three key reasons:
- S&P 500 and technology companies are rebounding. The S&P 500 was 31% in 2019, and technological giants like Apple, Facebook , Google and now Tesla have had GIANT years.
- After the Fed telegraphed no more from two hikes, a sharp and unexpected decline in mortgage rates.
- With about 2,000 to 3,000 potential new buyers and 10,000 new millionaires, Tech IPO boom is overlooking the streets. In 2020, all of them are becoming liquid.
San Francisco has had an entrepreneurial spirit since its inception (i.e. the Gold Rush); therefore, further wealth creation and innovation will take place here. Since it is the epicenter of the technology industry, many people have a huge wealth. Wealth is not only limited to the wealthy founders of leading technology companies or active VCs, but also general workers, who have one of the highest salaries and incomes in the world.
In addition, inventory is way down in 2020 as sellers decide to wait for the coronavirus uncertainty. Back in the financial crisis of 2008-2009, stock stocks shot up with the over-released millions of homeowners. Most investors now have huge shareholders.
Finally, in 2020, mortgage rates are constantly lower. Accessibility is now much higher. I could refinance a Jumbo Lending free of charge to ARM 7/1 at 2,625%. Consequently, after six years of my home, Golden Gate Heights, San Francisco, I have seven about $1000 and am saving about $350 a month in interest.
So is it wise to buy now?
If you're financially able to buy a home in the Bay Area — and if your life and family circumstances are in line with home purchases — then this year is a good one to buy. The Bay Area and American cities in general are at an inflection point that may lead to re-energized home construction in the coming decades. That process, however, will be gradual and will almost certainly only temper the appreciation of housing prices — not reduce it — which means that, as expensive as housing now may seem, it will probably never be cheaper!
In the next two to three years, there is a risk of recession, but with extreme political events in mind, a recession that is approaching will have a limited impact on the housing market in the Bay Area. And last but not least, if buying a Bay Area home seems out of reach, stay tuned: the next few years will bring a raft of innovative financial arrangements that straddle the middle ground between rent and ownership, and some of them might be right for you.