Gilroy develops waiting trend with home buyers
By Rodrigo Zavala
Special to the Dispatch
Gilroy – Home prices in Gilroy have been steadily declining during the past year, but that doesn’t necessarily mean now is the right time to buy.
As a county the median price for homes has increased by $30,000, but the situation in Gilroy is different. From November 2005 to November 2006 the median price for a home has dropped from $739,000 to $687,000 – a 7 percent slide, according to REInfoLink database.
The lower prices and good interest rates have local real estate agents advising those looking for a home to take advantage of what they are calling a buyer’s market.
“There is no reason not to buy,” said Susan Jacobsen, with Starritt Realtors. “There is more supply and less demand than there was a year ago and this is a great time for buyers to negotiate.”
Jacobsen added that this new trend is forcing sellers to lower prices in order to remain competitive on the market. Along with a price break, sellers are renovating homes, which is something that was rarely done last year, Jacobsen said.
Despite claims by real estate agents that the time to buy is now, John Mark Brady, an economist at San Jose State University, said that buyers will be better off waiting a few months.
“Prices have gone down, but they will continue to go down,” Brady said. “In my opinion, buyers – if they can – should try renting for a while as prices come down farther.”
Buyers like Gilroy resident Juan Biruetta, 19, said that it is still too expensive to buy a home.
“It’s not a good time to buy. The prices are too high,” said Biruetta, who was told by lenders and real estate agents that right now is a good time to buy. He is in the process of buying a home in Madera – six rooms on two acres – for $400,000.
But the question remains how real-estate agents believe most people will be able to afford homes. California is next to last when it comes to home ownership in America, according to the California Building Industry Association. Nationally, 70 percent of families own a home, but in California it is only 58 percent. In Santa Clara County it’s even worse. Less than 35 percent of Santa Clara County residents can now afford a median priced home, according to the California Association of Realtors, Housing Affordability Index.
Yahoo Real Estate lists the median annual family income in Gilroy at $65,330 a year – not enough to afford a monthly mortgage on a median-priced $687,000 home. In Morgan Hill the median home price is $775,000. To afford a median price home in Gilroy, a household would need to earn an annual income $162,099 to afford a 30-year, 6-percent fixed-rate mortgage, according to Interest.com – nearly $100,000 a year more than the median-income household in Gilroy.
“There will always be some buyers who will wait for bottom of the market,” said Patty Filice, a broker for Intero Real Estate Services.
The downward trend in prices have many buyers on the sidelines. Consequently houses that sold in a matter of weeks a year ago have remained on the market for up to six months. But some real-estate agents claim that is now “normal.”
Jacobsen said she has noticed a holding pattern among buyers, but that she expects more to commit to a home come spring.
The current trend does not equal doomsday for sellers, but instead a “normal” market has poked through the haze of the frenzy of a few years ago, said Denise Apuzzo of Century 21 Premier.
“The market has stabilized and Realtors are optimistic,” she said. “Houses are on the market for a normal time of three to six months and this doesn’t mean doom and gloom for sellers.”
Across the country it takes six months to a year to sell a house, said Tony Lupina of RE/MAX Valley properties, who holds similar views to Apuzzo’s.
Filice said it is hard for her to forecast farther than a year, but that she “sees things being fairly stable in 2007, with prices slowly going up in 2008.”
Staff Writer Betsy Avelar contributed to this story.
