First there is disbelief or denial. “It cannot be that bad – people are exaggerating.” That’s followed quickly by “I thought it was bad where I used to live!”
Then there may be outrage (anger is too mild a word): “Why would anyone pay that to live there?”
Next, a little bargaining: “What’s the work around? Are there any bank owned homes? How about something older – I don’t mind a 15 year old house…” (To us, that’s a young house, by the way.) “What about buying a lot and building?” Or the commute negotiation “I thought I had to be within 15 minutes, but I could go 30.” A typical commute might be 30 minutes in the morning, but 45 in the evening. Many people have worse than typical, though, as they want a bigger, nicer home, better schools, quieter location, etc.
Depression soon follows suit. This may be accompanied by “We just cannot do it” or “We are not willing to do that” (until they see that rents are $4000 for a smallish house in an only OK area and $6000 per month for a decent sized home in a good area.)
Acceptance comes at last. It may lead people to decide to go all in, bite the bullet, and buy locally. It may lead them to move way out of the immediate area and embrace an hourlong commute – or to take the Apple or Google bus to work, if applicable. It could lead them to move to Seattle, Orange County or somewhere a little less overwhelming in terms of housing costs.
Sometimes people think they are at “acceptance” as they write offers which are habitually 5-15% too low. In reality, they are actually still in the “bargaining” phase, hoping for a good deal amidst our raging seller’s market. That doesn’t usually happen, so writing a lot of unsuccessful offers frequently leads to depression (and sometimes blaming their agent for their offers not going through, even when it’s clear at closing that their offer price or terms were the issue).
How fast can you get to acceptance and write a realistic purchase offer? For people who could have bought 12 months ago but are still shopping now, that wait has cost them about 10% of their home price in many cases. For those looking 2 years, it’s easily double that, and in some cases prices are up a full 30%. That’s like setting a match to your entire down payment.
If you want to be a successful home buyer in this crazy Silicon Valley real estate market, you will need to get onboard quickly, because the longer you take to get to acceptance, the more expensive your final home will cost when the market isappreciating, as it has been for about 3 years now. Time is money and nowhere is that more true than in the San Jose, Silicon Valley, or South Bay real estate market.
Looking for more Silicon Valley real estate resources? Here are a few of my other sites, blogs, and market stats tooks:
popehandy.rereport.com – real estate statics for San Mateo County, Santa Clara County, and Santa Cruz County
popehandy.com – Silicon Valley real estate, Los Gatos real estate, info on many areas of the realty market in Santa Clara and San Mateo counties
SanJoseRealEstateLosGatosHomes.com – Santa Clara County real estate, special focus on San Jose areas of Almaden & Cambrian and also Los Gatos with info on the real estate market, neighborhoods, and more
LiveInLosGatosBlog – Los Gatos real estate, neighborhoods, events, businesses, parks. Many photos and neighborhood or subdivision profiles.