There are plenty of houses for sale in California, and 2020 has seen a robust real estate market season despite the global pandemic and the brief pause in the market during the lockdown in the early spring. With interest rates falling and the future uncertain in many ways, is this a good year to buy real estate in California?
Define Your Terms
What’s good for one person might not be good for another, so it’s crucial to understand what “good” means for you as a potential home buyer. It really boils down to buying smart.
2020 is a good year for you to buy if you have found the right location, the right home, the right payments, and the right interest rates. If everything comes together and you find what you need, then now is the perfect time to buy no matter what’s happening to anyone else. Let’s consider each important aspect of what makes it a good time for you to buy.
Location, Location, Location
It’s not a good time to buy if you can’t find something suitable in a good location. It’s never been more important to look for property in good areas with proven value. You can’t move your house once you’ve bought it, so if the area changes significantly, your fortunes might just change with it and you could lose out on your investment. It’s important that the location work for your specific needs, like proximity to the things most important to you or local school district rankings, but don’t let those considerations tempt you into buying property that can’t hold on to its value.
What makes a location “good?” There are a couple of factors and absolutes that apply. For example, homes in cities and neighborhoods where there isn’t a lot of room to expand tend to hold and increase their value over time compared with cities that have lots of room. The amenities of a neighborhood can matter as much as accessibility and appearance. The acreage of a property is often more important than the qualify of the actual structure in determining value because land always becomes more valuable with time.
Look for safe neighborhoods where the community is invested in long-term growth, where there’s a good track record of stable and growing home values, and where everything, from roads to nearby parks, looks well-cared for. If homes are moving fairly quickly in that area, that’s often a sign other people think it’s a good neighborhood, too. Look for development in the community, but not right where your home is located.
Know What You Want
It’s a good time to buy if you’ve found a home that actually fits what you need. Let’s say you know you really need four bedrooms to have the space you need to spread out or work from home. Don’t feel pressured to settle for a two-bedroom place because you feel a sense of panic. That panic could come from a mistaken belief that everything good will be sold if you don’t buy immediately or desperation to get out of a rental situation. But if the place isn’t right for you, it’s not a good buy. That two-bedroom place will be driving you crazy a year from now, and you’ll be back looking for homes to buy.
It’s also important to consider what you are willing to invest to fix a place up. When a home needs significant work done, like a new roof, you can often get a much better deal on the price. But is that smaller overall price really good for you? If it doesn’t change your monthly payments significantly, which, after all, is what you have to live with month-in-and-month-out, is it worth it for all the hassle and immediate expense of having to get the roof redone on your own? It might be, of course, depending on what you want, and that’s the key: know what you want and lay it out before you start looking. That way, you’ll be less likely to lose your heart to a place that looks nice but really isn’t good for you.
Keep Payments in Mind
To the seller, the total price is everything, but to the buyer, the total price is really less significant than the monthly payments, interest rates, and insurance. It’s possible for the price to be right but the payments to be wrong; for you. It’s not uncommon for buyers to overestimate what they’ll be able to afford in monthly payments, and this is especially an issue when buyers forget to figure in fees, homeowners’ insurance payments, interest, and other related items.
For most buyers, what makes a home affordable is going to be that monthly payment, so now is a good time for you to buy if you’re prepared. This means getting pre-qualified for a loan, of course, but don’t trust the mortgage company to make your decision about what monthly payments you can afford. Instead, sit down before you seek pre-qualification and figure out your budget. What can you afford, and what kind of cushion will you have on hand to see you through those unexpected life events that happen to us all from time to time? With this information in hand, you can get qualified for a loan you can truly afford and know that it’s a good time for you to buy.
Don’t Overlook Interest Rates
The final point to consider is whether this is a good time for you to buy is whether you’re able to take advantage of historically low interest rates. Since the pandemic, interest rates have tumbled. Most real estate professionals have never seen interest rates this low, and while it’s possible these rates could go lower, it’s equally possible (and possibly even more likely) that they can only go up from here. This is a unique opportunity, and it’s not one you want to miss if you can possibly avoid it.
While you shouldn’t buy now unless it’s a good time for you in all ways, it’s also crucial to remember that even a small jump in interest rates can turn a great deal into no deal at all–overnight. Right now, the government is buying mortgage bonds, causing the price to go up and the interest rates to go down. And while most experts are predicting that interest rates will remain relatively low for the next few years, that doesn’t mean they’ll remain this low for much longer. If other factors are all good for you, then low interest rates are just another important reason to go for it.
Is 2020 a Good Year to Buy Houses for Sale in California?
You can find a dozen websites giving you a general opinion on the state of the market in 2020 and thoughts on whether now is the time to buy. But in the end, it’s really all about you. If you can find a home at your price point, with all of the features you want, in a good area, in good condition, and especially when interest rates are low, that is the stars aligning for you. You should take advantage of this “bubble” in the market that offers something for everyone. To get help and advice on what’s truly good for you, and insight from Southern California’s leading real estate expert, talk with Teresa Mack today.