Over 3 months into 2014, we continue to see rising real estate prices in every county in the Bay Area. This is due to the simultaneous shortage of available properties on the market and better job employments in the Bay Area, making it harder for many new buyers to find their first home. The imbalance of supply and demand is contributing to the rise of the prices, and as a result, short sale and foreclosure of properties have been less prevalent recently. Many investors have moved to the regular market to acquire properties for remodeling or rebuilding. Additionally, we have also seen an increase in the purchase of US real estate by international buyers, who find real estate prices here increasingly attractive. Just earlier this month, one full tour bus of foreign investors stopped by one of our listings in Cupertino! Since international investors and buyers like to pay in cash, it is becoming more of a challenge for first time home buyers (who need to take out loans most of the time) to compete with them.
Another challenge we have seen first time home buyers struggling with is setting the offer price. One common mistake is the overuse of the CMA (Current Market Analysis) and the Zillow estimate price to determine the possible offer price. Since prices are subject to constant fluctuation, it is hard for these measures to always be accurate. Oftentimes, this use results in frustration as first time home buyers watch their offer constantly outbid by others. This is because when prices are changing rapidly, it is hard to find a matching CMA and an accurate Zillow estimate price.
However, though these challenges do exist, there is still hope for first time home buyers! Understanding the current state of the market and why these challenges exist is a major first step to a successful home purchase. We have personally witnessed many successful stories to prove it. In a future blog post, I will continue to discuss how to prepare an offer price that is competitive and effective in this market. Meanwhile, if you are a first time home buyer, my main piece of advice is to find an experienced realtor who understands the market and knows how to negotiate an offer for your best interest.