The table below summarizes the median prices for single family home in many different towns in Bay Area. The prices are based on MLS data for each town for the period between Jan 2011 - May 2011 and gross living area of 1000-2000 sq ft.
For more details on current prices in any specific town in Bay area, please email me your request at
Rekha@RekhaChatwani.com
City Median Price City Median Price
(1000 $) (1000 $)
Merced 100 Alameda 550
Stockton-South 102 Antioch 165
Sacramento 110 Brentwood 230
Modesto 113 Castro Valley 370
Stockton-North 130 Concord 275
Lathrop 136 Cupertino 930
Antioch 165 Danville 640
Tracy 173 Discovery Bay 230
Brentwood 230 Dublin 410
Discovery Bay 230 Freemont 500
Oakland 235 Hayward 255
Hayward 255 Lathrop 136
Concord 275 Livermore 330
Livermore 330 Los Altos 1325
San Jose
- Alum Rock 330 Los Gatos 900
Castro Valley 370 Merced 100
Union City 370 Milpitas 440
Newark 390 Modesto 113
Dublin 410 Mountain View 900
San Jose-
Evergreen 430 Newark 390
Milpitas 440 Oakland 235
Freemont 500 Palo Alto 1250
San Ramon 537 Pleasanton 588
Alameda 550 Sacramento 110
Pleasanton 588 San Jose-
Alum Rock 330
Santa Clara 590 San Jose-
Evergreen 430
Danville 640 San Ramon 537
Sunnyvale 790 Santa Clara 590
Los Gatos 900 Stockton-North 130
Mountain View 900 Stockton-South 102
Cupertino 930 Sunnyvale 790
Palo Alto 1250 Tracy 173
Los Altos 1325 Union City 370
Sunday, June 5, 2011
Saturday, April 16, 2011
Rent vs Buy
A listener on Pravasvani Sham Ka Safar program, aired on KLOK 1170 am, asked whether one should buy or rent the house.
The answer is a very personal thing and the best course of action may be based on financial, emotional, and personal factors. So let us look at the personal or emotional aspects.
Owning a home provides a place which you and your family call a home. It is a sign of stability which is cherished by the family throughout the life. Kids always remember the house they grew up in as their home throughout their life. Owning a home means you are not subject to landlords whims who may decide not to renew the lease and you are forced to move. If the move is local, kids may not have to change the school. Or the move may be slightly long distance, in which case kids have to change school, make new friends, get adjusted to new environment etc.
Owning a home provides a place which you and your family call a home. It is a sign of stability which is cherished by the family throughout the life. Kids always remember the house they grew up in as their home throughout their life. Owning a home means you are not subject to landlords whims who may decide not to renew the lease and you are forced to move. If the move is local, kids may not have to change the school. Or the move may be slightly long distance, in which case kids have to change school, make new friends, get adjusted to new environment etc.
The financial aspect is simpler to address. If you are planning to stay at one place over a long period of time, then owning a home definitely makes financial sense in any market. Historically, owning real estate has been on average the highest source of appreciation. Many wealthiest people in America own their fortunes to real estate investments. All the landlords provide rental units not because of the goodness of the heart but because it is the safest source of investments.
There is a practical aspect to the home ownership. One should have sufficient income, stability, and reserves to afford mortgage payments, property taxes, insurance, home improvements, utilities etc. Typical rule of thumb is that total housing related expenses should be about 1/3 of gross income. Buying home by stretching your expenses beyond your income has led to the current crisis. The days of using house prices as an ATM are gone. There is no doubt that if one can afford to purchase a home and keep it for a long term period, then ownership benefits will outweigh rental benefits.
There is a practical aspect to the home ownership. One should have sufficient income, stability, and reserves to afford mortgage payments, property taxes, insurance, home improvements, utilities etc. Typical rule of thumb is that total housing related expenses should be about 1/3 of gross income. Buying home by stretching your expenses beyond your income has led to the current crisis. The days of using house prices as an ATM are gone. There is no doubt that if one can afford to purchase a home and keep it for a long term period, then ownership benefits will outweigh rental benefits.
The situation for a short term is not clear and varies from place to place and your time horizon. There are many financial calculators which allow one to compare the cost of renting a home vs the cost of owning a home. One such calculator link is given below-
http://realestate.yahoo.com/calculators/rent_vs_own.html
Considering todays low market values and low interest rates, buying a home will be financially better than renting it for many people and in many markets.
Considering todays low market values and low interest rates, buying a home will be financially better than renting it for many people and in many markets.
Thursday, April 7, 2011
How To Refinance House Under Water?
A question frequently asked by listeners on Sham Ka Safar program Pravsavani at KLOK 1170 am and from me is My house is under water and my interest rate is high so I can refinance my home to benefit from todays low interest rates?
There are not too many options available in such a case. In most cases, banks need a 20% equity in the home to refinance it. So if your house is under water, meaning the current value of the home is less than the current mortgage balance, then one can refinance the 80% of the current home value and pay the difference between the refinanced amount and the current loan amount. To give a specific example, if the current loan amount is say $400K and the current market value is $300K, then you can refinance the loan amount of $240K ( 80% of $300K) and bring $160K cash to pay off the first mortgage. Obviosly, in today's economy, this option is not available to majority of the people.
The next option is to find out if you are eligible to benefit from HARP ( Home Affordable Refinance Program). This is a government program and has strict guidelines for its eligibility) . Some of the main requirements are described here.
(1) The loan should be owned by Fannie May or Freddie Mac. The borrower can call the loan servicer and and ask if the loan is owned by Fannie May or Freddie Mac. One can also check it out online by visiting the following websites- http://www.fanniemae.com/loanlookup/ and https://ww3.freddiemac.com/corporate/.
If your loan is not owned by Fannie or Freddie, then you are not eligible for HARP.
(2) You must be current on your mortgage payments ( current means should not be more than 30 days late for the last 1 year)
(3) Your current mortgage amount should not be more than 125% of your current home value.
(4) The loan amount should be less than $729K
(4) The property should be a owner occupied home
(5) You should be able to afford the new payments.
If you meet all these requirements, then you should contact your current servicer and apply for refinance under HARP program. You have to pay the cost of refinancing which should typically be less than 1% and can be recovered easily because of the reduced interest rates.
There are not too many options available in such a case. In most cases, banks need a 20% equity in the home to refinance it. So if your house is under water, meaning the current value of the home is less than the current mortgage balance, then one can refinance the 80% of the current home value and pay the difference between the refinanced amount and the current loan amount. To give a specific example, if the current loan amount is say $400K and the current market value is $300K, then you can refinance the loan amount of $240K ( 80% of $300K) and bring $160K cash to pay off the first mortgage. Obviosly, in today's economy, this option is not available to majority of the people.
The next option is to find out if you are eligible to benefit from HARP ( Home Affordable Refinance Program). This is a government program and has strict guidelines for its eligibility) . Some of the main requirements are described here.
(1) The loan should be owned by Fannie May or Freddie Mac. The borrower can call the loan servicer and and ask if the loan is owned by Fannie May or Freddie Mac. One can also check it out online by visiting the following websites- http://www.fanniemae.com/loanlookup/ and https://ww3.freddiemac.com/corporate/.
If your loan is not owned by Fannie or Freddie, then you are not eligible for HARP.
(2) You must be current on your mortgage payments ( current means should not be more than 30 days late for the last 1 year)
(3) Your current mortgage amount should not be more than 125% of your current home value.
(4) The loan amount should be less than $729K
(4) The property should be a owner occupied home
(5) You should be able to afford the new payments.
If you meet all these requirements, then you should contact your current servicer and apply for refinance under HARP program. You have to pay the cost of refinancing which should typically be less than 1% and can be recovered easily because of the reduced interest rates.
Saturday, April 2, 2011
Is Earthquake Retrofitting Required?
Is earthquake retrofitting required for sale of home?
A listener wanted to know if earthquake retrofitting is required when selling or refinancing a single family home?
Sale of a home or refinancing of home does not require the seller to retrofit the home for earth quake safety. However, the sale of a home does require the seller to provide the new buyer with a Property Transfer Disclosure ( TDS) form. This form essentially details items included in the sale, repairs done on the property, a history of know defects in the property, and any other factors which may affect the value of the property. California law also requires seller or their agents to provide a number of consumer safety guides. These include Residential Environmental Hazards , Protect Your Family From Lead , Homeowner's Guide to Earthquake Safety. If home was built before 1960, the seller or their agents are required to answers questions related to the home structure pertaining to Earth Quake Safety. These disclosures provide necessary information to the buyer regarding the suitability of the purchase.
In view of the recent Earth quake in Japan, it is natural to be concerned about the possibility of earth quake in Bay area and its potential damage to your home. Homeowners’s Guide to Ea rthquake Safety shows the history of major California Earthquakes for the last 100 years. If your home lies in a major earth quake area and you are concerned about the damages, one should consider retrofitting the home and getting earth quake insurance. Retrofitting homes can be done through certified retrofitting contractors. Earth quake insurance can be obtained through your home insurance providers. Retrofitting of older homes can reduce the cost of the insurance premium. It then becomes a matter of personal choice of weighing cost , insurance savings, and the peace of mind.
More Information can be obtained by the following links.
Friday, March 25, 2011
To Buy or Not To Buy?
A listener on KLOK asked me a question whether it is a good time to buy a home in Bay Area now? And what will happen if they move back to India after 2 years.
In my opinion, it is a very good time for buyers, especially first time home buyers, to buy a home. The interest rates are at historically all time low. The house prices have been coming down continuously over the past 3 to 4 years. We believe that house prices have reached the bottom and will start to creep upwards slowly. So it is a very good time to buy. Investors from all over the world are flocking to buy real estate in USA as they believe that US real estate values are very low and provide a safe investment. Purchasing and holding real estate for a long time is considered a very safe form of investment for many years. Plus home ownership provides additional benefits of stability and tax savings.
Now consider what can happen after 2 years. Many people plan ahead and hope that they will go back to India and settle there. The fact of the matter is that in many cases, such plans do not materialize. The plans change as circumstances change and many people stay in this country much longer, and some times never go back. Even if one goes back to India in 2 years does not mean that they should sell the house immediately. If the market conditions are good and it makes financial sense to sell the house, then one should sell it by all means. Otherwise, one can always rent out the property and manage it remotely. In todays age, it is very easy to manage property remotely. One can hire property management companies to look after the investment if necessary.
All investment properties are not equal. One has to select the investment homes carefully. A home in good neighborhood, good school district, and good condition is easy to rent and manage. If price is a limitation, then one should select compromise on the size but not on the quality. The other important thing to remember is the cash flow. One should only buy the home which has break even or only slightly negative cash flow. This allows one to hold on the property for a long time without breaking your bank.
Let us know, what do you think? We welcome your comments.
In my opinion, it is a very good time for buyers, especially first time home buyers, to buy a home. The interest rates are at historically all time low. The house prices have been coming down continuously over the past 3 to 4 years. We believe that house prices have reached the bottom and will start to creep upwards slowly. So it is a very good time to buy. Investors from all over the world are flocking to buy real estate in USA as they believe that US real estate values are very low and provide a safe investment. Purchasing and holding real estate for a long time is considered a very safe form of investment for many years. Plus home ownership provides additional benefits of stability and tax savings.
Now consider what can happen after 2 years. Many people plan ahead and hope that they will go back to India and settle there. The fact of the matter is that in many cases, such plans do not materialize. The plans change as circumstances change and many people stay in this country much longer, and some times never go back. Even if one goes back to India in 2 years does not mean that they should sell the house immediately. If the market conditions are good and it makes financial sense to sell the house, then one should sell it by all means. Otherwise, one can always rent out the property and manage it remotely. In todays age, it is very easy to manage property remotely. One can hire property management companies to look after the investment if necessary.
All investment properties are not equal. One has to select the investment homes carefully. A home in good neighborhood, good school district, and good condition is easy to rent and manage. If price is a limitation, then one should select compromise on the size but not on the quality. The other important thing to remember is the cash flow. One should only buy the home which has break even or only slightly negative cash flow. This allows one to hold on the property for a long time without breaking your bank.
Let us know, what do you think? We welcome your comments.
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