By guest: Brian Lee

Is anyone surprised that Atherton is the country’s most expensive housing market? A recent Forbes article reported the town has a median home value of more than $6.7 million. Atherton also topped that list a decade ago, but back in 1998, the median home value was more than $1.4 million. These days, $1.4 million for a Peninsula home seems like a bargain.

Navigating the local housing market requires some expert help, so I’ve asked Coldwell Banker’s Brian Lee for advice. Brian is a real estate agent who serves the Half Moon Bay area and the Peninsula.

As housing prices continue to climb, how can would-be buyers ever hope to afford a house? 

Almost everyone is concerned about a down payment! If you put down 20 percent, you don’t have to pay mortgage insurance, and you’ll pay an interest rate of between an eighth and a quarter of a percentage point less on your loan. That’s small, but if you have a million-dollar mortgage, it adds up.

You can buy with as little as 3.5 percent down, but that’s less desirable to sellers, who sometimes have a bias. They think someone who puts down 30 percent or 50 percent may have an easier time getting a loan. That’s not always the case, though.

I’d say that buying a home is less about how much money you have and more about your determination in the long haul. Save, save and save—and then come up with a plan. If you make $500,000 a year and spend it all, you won’t be able to buy afford a house. But I’ve seen people who make much less do it.

Parents sometimes help. I had one family where the parents paid 10 percent of the home’s price with an agreement that when the couple sold it, they’d give the parents 10 percent of the proceeds. That’s a creative way of funding a home purchase.

What about buying outside the Bay Area?

People are taking on commutes of two to three hours each way when they buy in Sacramento or Modesto but work in the Bay Area. You need to consider whether moving somewhere cheaper will improve your life. On the flip side, if you buy a home here, you don’t want to be in a situation where you can’t afford to make necessary repairs or go out to eat.

Any ideas?

Prices seem to be slowing down, but is this a seasonal blip downward or the sign of a trend? There have been fewer multiple offers, and properties are on the market longer.

Sometimes you have to be patient and strategic. I’ve had people buy properties in December when not many people are looking and it’s a slow time of year.

Talk to a real estate professional and finance person early on so you know what you can afford and what housing really costs. San Francisco properties are often listed at far less than what they sell for. It’s a strategy to entice people to bid against one another and drive up the sale price. The advertised price of a home isn’t necessarily what it will take to buy it.

I recently helped buyers who wanted a home in Half Moon Bay. It was vacant, and the out-of-town agent hung the “for sale” sign in an area that wasn’t particularly visible, so few people saw it. We put in our offer ahead of the open house. The buyers saved at least $20,000 on the purchase. That was some good news in this housing market.

Reprinted by permission

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