Teresa Boardman of St Paul Real Estate - ps she is a great photographer - recently wrote a post about “move-up” buyers in her market want to buy but since they existing home is underwater they can not sell their existing home. Hence they are unable to buy.
Many of her comments about the entry level being the strongest portion of the market with the “move-up” market being very slow or non-existent applies to the market on the San Francisco Peninsula.
Many first-time buyers are getting into the market - taking advantage of lower prices, very low rates and tax credits. Most sales are at the low end of the price spectrum with foreclosure REOs being a large percentage of all current sales. Hence median and average prices continue to go down.
The “move-up” buyer is sitting on the fence. Unlike your area, it is NOT because these potential “move-up” buyers are “under water” but rather they do not have confidence in the economy or the market to make a move-up in a market where moving up means selling for $1.5M and buying for $2M. These folks are just not interested in taking on $500K in additional debt when things look very uncertain. In addition since the price of their home has dropped, they may no longer have enough equity in their current home to put the 20% to 25% down needed to buy and finance their new home with a jumbo mortgage. So they are not “underwater” but lack the down payment to buy the larger house. I believe the “fear” factor is the bigger issue but lack of equity to make the downpayment on their purchase also contributes to the lack of activity in the move-up market.
Arn
Move up buyers stay home while 1st time buyers enter market
March 26th, 2009 · 2 Comments
Tags: Redwood City real estate · Portola Valley Real Estate · Mountain View real estate · First-time home buyers · los altos real estate · San Carlos Real Estate · Menlo Park Real Estate · Palo Alto Real estate · Sunnyvale Real Estate · Real Estate Data
2 responses so far ↓
1 teresa boardman // Mar 27, 2009 at 2:51 am
Thanks for the link love. I am sure some of the would be move up buyers in my market are sitting on the fence because they lack confidence. Our local unemployment rate has gone up. Right now I am not sure I would feel comfortable buying a house unless the payments were the same as what we are making now. . . I guess that wouldn’t be a move up.
The people that are talking to me are all under water . . the others are not talking to Realtors right now.
2 Pam Buda // Mar 30, 2009 at 1:10 pm
I have a number of clients who are moving sideways–their homes in Marin, Los Altos and San Francisco (all in prime spots) are going on the market from now to mid-April. One is making a lifestyle change from Marin, same employment, longer commute, in order to have the horses at home in Sonoma County. The second is selling their vintage SF residence of thirty years to purchase a vintage home at half the price in walking distance of the Healdsburg Plaza. They are retired. The third is selling their modest ranch home ($2M!) in Los Altos, to buy a little country property for $500 or $600 in Sebastopol or Santa Rosa. They are empty nesters. Two of the couples will keep apartments or condos in the Bay Area for commute avoidance. So Arn, perhaps some of your clients might consider a move to the wine country? I would be happy to help them of course!
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