East Bay Blog

Real Estate in the East Bay, like many other places, enjoyed terrific gains over the last several years.  One of the side effects of this jump in home values were people buying a little more than they should or could afford.  When home values were increasing, it was very tempting to buy a home that may have been a little out of our price range.  It was easy to think that with home values increasing, we had to buy that home now, or we would never be able to afford it in the future.  Adjustable rate loans let people qualify at ridiculously low introductory rates.  Lenders knew those rates wouldn't last forever, but who cares when homes are increasing in value as fast as they were.  Worst case, people could just refinance out of trouble, or so we thought.

Welcome to present day reality.  Some of those people have rates that are now adjusting up to market rate, and they can't afford the payment.  Even worse, they can't refinance because the equity that they thought would certainly save them is not there.  That is a big reason why we are seeing the rise in short sales and foreclosures, however you can benefit from this lesson.

Seeing what some people did wrong, remember to budget yourself when looking for a home.  Yes, in the long run I'm sure your home will increase in value, but that could take years.  Make sure you know what your payments will be before you start house hunting, and don't even look at homes over your price range.  That will only serve to temp you to stretch yourself.  Be realistic with your payments.  Although some may say that this market is "bad", I don't think so.  It's just different.  Make sure you pay attention, and remember your budget.  A good Realtor will never try to push you into a home you can't afford.