I pulled out my crystal ball out so I could see the future for home-buyers in California real estate. And, are there any changes coming its way in the near future. After some analysis of MLS data I came to realize 5 basic aspects of Silicon Valley real estate everyone can expect over the next five years.

They are:

1. Sale Prices will continue to rise.

2. Interest Rates will stay flat and could increase slightly.

3. Loan underwriters will continue to scrutinize loan application.

4. Distressed Homes will be far and few in-between

5. Inventory of homes will remain low.

What does that mean to you? It depends is the answer as to whether you are a home buyer or home seller. Home buyers are going to pay more for their home year over year at the tune of 18-21% and have a less choice of homes to choose from. On the other hand, home sellers will be in the driver seat and will be able to sell their homes without too many concessions both in terms of price and terms.

The US economy also has not grown as anticipated. The Feds have no choice but to keep interest rates low so that home buyers will be able to afford the increase of home prices. It is the real estate sector of our economy that is going to give us the growth we need to keep from going into another market correction as we saw in 2008.

Bank underwriters are pulling their hair out by the roots. Prices of homes in Silicon Valley have risen so fast the comparable properties that have sold are not high enough for the new homes that are selling. It is not uncommon today to find a home not appraise out for the purchase price. This mean the home buyer must put more money into the escrow to cover the difference between the purchase price and the bank appraisal price. I don’t see a let up on this trend either.

The good news for homeowners that are under water on their mortgage payments is that the market is moving so quickly that they can put their home on the market for sale and get a price that will cover their loan. They may not have a profit but they won’t have a foreclosure on their credit.

Inventories will remain low. Homes I see coming on the market are ones usually in poor locations. Luxury homes now on the market for sale for millions of dollars are next to freeways, or a 4-way main intersection. For example, there are two home on the market for sale and they are having a difficult time selling. They will sell eventually, however, these luxury homes will sell for less money than other homes in these luxury communities because of their location.

This doesn’t hold true for only luxury communities. Homes in other communities on busy streets, poorly design homes, homes with special assessments, and high crime rate homes are finding their ways on the market. And they are selling. The earlier homeowners are either moving to a different location or moving out of the area. But now is the time to sell a home that in a down market would be more difficult and need concessions on the part of the sell on price and terms.

As a home buyer what can you do to make the right decision? First of all buy a home. Don’t play around commit and buy that home. Every year you wait is another year of double-digit appreciation you will lose.

You don’t have to buy just anything, however, if you find a home that will offer the basic ingredient of shelter for you and your family then buy the home. All home buying experience are the same…it’s all about the economic of it all. You can only buy what you can afford. So get laser focused on your price and go forward.

So take advantage of the real estate market you have in front of you today. Don’t over extend yourself and you’ll be fine. Define for yourself a workable plan for your own personal real estate acquisition and stick to it. Remember buying a home is a process…not an event like the Super Bowl.

As always, Cliff Keith and Team would love to help you find your new home. We have 40 years of experience and know what it takes to buy or sell a home. Our goal is always to make our clients better off tomorrow than they are today. We succeed only when the people we help succeed too.

Here’s a 3-step process to get on the road to success. 1. Pick up your cell phone. 2. Call Cliff Keith and Team at 650-346-7366. 3. Tell us your desires to purchase a home and let’s talk on how we can make that come true for you.