San Jose Renters LOSING $545 a day | U S housing market | Housing Snapshot 🦅 🌎 ⚓️ (rent vs buy calculator)

 
 


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San Jose Renters LOSING $545 a day | U S housing market | Housing Snapshot 🦅 🌎 ⚓️ (rent vs buy calculator)


Introduction: The Cost of Renting in San Jose

Rent vs Buy Calculator

San Jose renters, you're losing 545 days. I'm sorry. San Jose renters, you're losing 545 a day to equity loss. You are that. And we'll talk a little bit about how much money you need to buy a house. We'll look at the rent versus buy calculator, but that's all part of the renting rent losers, renters losing money.


And then our housing market, a little economic point of view, and. Apple homes for sale. So homes for sale near Apple and Mountain View home of the week and REO of the week or bank-owned property of the week. Let's get moving. Lots of, lots to look at today. Okay. 


Understanding Down Payments and Closing Costs


How much money do you need to buy a house?

How much money do you need for a down payment?

It really depends. Let's talk about it, there we go. It really talks about, how it really depends on your credit, your income, how much money you can afford per month, and how much down payment you actually have. On top of that, you have closing costs, which we'll get into, cause I have a little calculator for that. But how much money do you need to buy a house?


It depends on where you buy it. And luckily, I spent yesterday about three, or four hours recreating a chart that I showed you a couple of weeks ago and found that the numbers are a little bit more accurate now. So let's talk about it. Breaking it down. You have the down payment. Now a traditional house is about 20 percent down, right?


So if you're a million dollars, you're looking at 200, 000 down and then you have an 800, 000 loan. You can go as far down as three and a half percent and even with conventional, depending on your income and how much money you can afford per month, you can go down to 3 percent in a conventional or I think even jumbos.


You can do that, but I'm not a lender, so don't listen to that. Okay. So we're always using millions of dollars cause I like those numbers are easy. So closing costs could be anywhere from half a percent all the way up to 2% Sometimes it's even 5%, depending on where we are with this National Association of Realtors lawsuit and how things shake out, but you do have to pay for certain things like an appraisal, a credit report orientation.


Origination. That's like a point. They call it application fee title search title insurance and underwriting. Now those are all fees that the lenders and title and escrow will charge you. Typically it's around one and a half percent plus or minus depending on the Value of the house where you are and you also have to pay taxes.


You have to pay for insurance. Sometimes you have to prorate that for the next six months. Sometimes you have an, so there's a lot of, it depends on a lot of different things, there are prepaid costs. So earnest money. When you put an offer on the table, you have to put you don't have to, it's suggested that you put about 3 percent down.


Now, if you're in Texas, you have this thing called an option, which is like 500 or a thousand dollars. And that's an option to get into a contract. They earn us money. It's on top of that. To say, I want to do my due diligence. And when the market's crazy, you put the option down and you find out, you don't want to buy this house because you did the inspections and it's a piece of crap and it's going to fall over.


You're like, ah, I don't want it. You back out. And the seller gets to keep that option. We don't have that in California. We just get into a contract 3 percent down, and then you start doing your due diligence. Typically in California, especially in our area, we already have inspections, disclosures, and reports, all done up before we go on the market.


So the buyers can see what they're buying. They can just buy it and say, yes, I want to buy it as is. And then that's done. They have the right to do further due diligence. If you find in the property report that it requires or suggests that you do a roof or foundation or whatever, then the buyer has a right and duty to know what they're buying.


And then if they decide they're going to back out, they have a contingency period to do that cash reserves. You also have to have something like six months of payment, PITI, principal interest tax, and insurance as a payment for this. So let me see if I can redo this.


There, I like that better. Let me make this bigger so you can see it. There you go. Cash reserves. Yeah, sometimes a bank will ask you to make sure you have at least 6 months in cash reserves. Cash reserves are based, if you're paying 2, 000 a month for PITI, then you have to pay I don't know, 12, 000 in cash reserves.


And it doesn't have to be cash. It can be in your 401k, in savings, it can be in stocks and bonds, however, you want to look at it. That's why on the loan application, they want to look at all that because the underwriter will be looking at all that to see how you qualify. And yes, you're going to have to pay for moving costs.


Now you can get your buddy to borrow their truck or get a trailer, but I always say get a mover, right? If you're young, I understand. I moved every time I moved, I had buddies and I had pizza and beer waiting for them. And, I was appreciative. But nowadays I'm a little bit older, a little more established.


I'm going to hire a moving company and it's going to cost me thousands of dollars because I have a lot of crap and you have to make sure you buy it. I have videos on that too. House payments. So again, 1, 000, 000 house payment house 800, 000. You're looking at, I think six or 7, 000 a month for monthly payments.


So just keep that in mind. You have to know that's going to be sustainable. It has to be sustainable for the next 20, 30 years or however long you plan on keeping it. How can I get the most affordable house payment? Obviously, you want to do loans lower mortgage mortgage insurance is. If you have less than 20 percent down, you're going to have to pay mortgage insurance.


That's in case you get it. Laid off or what have you, and you can't make the payments. That's what your mortgage insurance is for. So a lot of different things go into this, right? And then there could be an HOA. Some houses have HOAs. A lot of condos and townhouses have an HOA, a homeowner's association.


You have to pay for that. It could be a hundred dollars a month, or it could be a thousand dollars a month, depending on where you are. So preparing to buy your house, I actually have a link to a checklist. If you're thinking about buying a house, it's down there below, make sure you take a look at it, right?

US housing market

Exploring the Impact of Housing Market Trends

Alright, I think this is a good time for us to take a look at this. Cost of renting. Now, here's what you have to envision. Over the next 10 years, this is the last 5 years. How much value is your house going to go up? This is the median sales price by city within Santa Clara County. And you can see that prices are continuing to go up.

Even though you see Palo Alto is pretty much tapped out. It might continue to go up and this one right here, I think it's Los Altos Hills. Yeah, Los Altos Hills has continued to skyrocket because we have multi-mega mansions which are the 32 million houses that are going for sale. And this one is Monteserino.

If you see it's swung up pretty high because again, Monteserino has some mega mansions. So the value of those homes is going to be more expensive than say Los Gatos. Which is this blue guy right here. Okay. So let's take a look at average sales prices. Again, where is it? Los Altos Hills, the top place.

That's where you want to be if you're going to be in Santa Clara, right? And then the next one is Montecerino. Those ones are skyrocketing up and you're like, Vito, the prices are just maintaining. No, they are, but they're not. Watch. Okay. And this is the average sales price by county. I have the same thing over here at the same thing over here for the median price, but you'll see that prices are wavering, but they're not.


So let's just take a quick look. 


Breaking Down the Cost of Renting vs Buying

Oh, if you live in Santa Clara County, Campbell, Santa Clara County over the last five years on the median, you're losing 685 a day. Watch what I did. Okay. Let me break this out so you can see this a little bit better.


So it's the same thing here on the average, the daily gain. If you're a homeowner in Campbell you're gaining 300 a day. And the way I did it is I did the average price over the last five years and this is year to date. So none of these calculations include this year to date. If I look at it, I calculated the difference between the year before and that year, and I came up with this.


So there was 165 net loss per day in Campbell from 2022 to 2023. Now, these are just averages, right? Over the last five years, you saw a huge gain. We saw 2021 and 2022, we saw a major push in upward velocity in Campbell. So if you took all that and averaged it, see, it's just the average of those prices. It is 300 a day.


That's how much you lose every day for being a renter in Campbell. Now let's go take a look at San Jose.


Yes, this is alphabetical. And if you want, I can share this with you. I'll walk you through. I'm not going to share it with you so you can use it, but I'll put this on a thing and we can ask and talk about it. 545 a day. Even though you lost money from 2022 to 2023. We're expecting prices to go up this year, too.


And it's not going to change for the next two or three years, unless we see World War Three, or there's a major house of cards that falls down 545 a day. My house gains on average, every day,


200, 000 in equity, a five-year equity, right? Is that right? That's why that's not really true, right? That's just the difference between here and here. Okay, so let's go down to Santa Clara County. I have counties here like San Mateo is 529 a day. Santa Clara County is 603. Now, if you give me an address, I can do the same thing for your house, just in your zip code based on the last five years, etc.


And you can really figure out how much your house has gained every year or lost because we did lose value over 2020. One and it shook out a little bit. So if you look at 2023, there was a net loss of 1500, 15, 000 on average. Again, these numbers are just your today. Once 2024 is done, I will add that to this and then we can have another number, but Santa Clara County, you're losing 600 a day on the average.


That's because it includes Palo Alto, Los Altos, Los Gatos, Cupertino, and Mountain View, right? San Jose is a lot more expensive. Or a lot less expensive than those houses. So keep that in mind when you're buying, think about where you want to buy. Palo Alto probably is topped out right now and, probably go up, but for the most part, you're going to see it now rent versus by that was your calculator.


How much money are you really losing? How much money can you afford? How much money can you afford? It's really right here. And it depends on your income. And I have this little calculator here on the right side that shows you how much money you have to make. To buy in a certain county. Now, I just have a couple averages here.

This is the U.S., Santa Clara County, and San Benito County. Because yesterday I was like, hey, San Benito's not here. And I'm tracking that. I figured I was going to look at it. But just for example, in Santa Clara County, the average income is 181, 000. That's the median income. median income. The median price for a house in Santa Clara County is 1.


7 million, which means if you did 20 percent down, you need 347, 47, 000, 348, 000. That's 20 percent down. Now remember, you can go 3 percent or 3. 5 percent depending on the house, depending on your income, and how much money you can afford. But if you're just doing this scenario on average, a median-priced house with your median-priced income, Monthly P.


I. T. I. Principal interest, tax, and insurance, not including H. O. A. Is 10, 542 or 126, 000 a year, which is 70 percent of your income now qualifying the underwriter guidelines require that you're at 45 percent on standard, but then you can get it. Little passes that mortgage your broker will get a waiver what they call it.


Forget it But they'll get the waiver through the underwriter saying He has enough money in reserves to be able to pay for this and it's a good investment, right? So these are the fees that you're looking at today when you're looking at closing a house. Remember closing costs? These are nonrecurring closing costs.


That's the point, the origination fee. And there's all these different little fees that you get tacked on from you're broke from your Mortgage broker and the escrow company and title company, et cetera. And if you have to do inspections, I put them there just so you can have an idea of what that might cost you, right?


Typically the seller already has the property and termite done. So that's saving you a thousand dollars right there. But now because you're, because Your NAR is being sued, buyers might be required to have to pay the agent commission. That's a nonrecurring closing cost and that's something you have to be aware of.


That's just something that I'm putting in there for discussion purposes right now. Right now, a majority of the houses are paying the buyer's agent commission, but that's not always the case. It's just so you know. So I have that prepared for you. So that's 91, 000. Yeah, it's expensive to buy a house. And then these are recurring costs.


Remember I was telling you about insurance, taxes, and all that stuff. All that stuff right here comes into it. And then miscellaneous, just because I don't know if there's something that's going to pop up. Now, before I get into anything else, understand that these are rough numbers based on.


The median price home in Santa Clara County. I can't tell you for sure what happens when we get into a contract I go to escrow and I ask him for a more accurate net sheet, this is what is called a net sheet. So this is just for discussion purposes, right? I'm not giving advice. I'm not telling you this is exactly how much it's going to be.


I'm telling you this is a rough number that could be completely off, but roughly speaking, you're coming down with 440, 000 with down payment and closing costs and everything else. That's your 441, 000 to buy a 1. 7 million house. And then here's your PITI based on 6%. P I T I. Hope that makes sense. Let me bring this out a little bit more so you can see it.


Principle, interest, taxes, and insurance. Now if you want to go interest only, I'm just guessing that you're at five and a quarter. I don't know what that is. Again, that depends on what your loan guy is telling you. Your loan person could be a little bit less by a factor of seven, 800, or 900, something you might want to think about not saying that you do it.


I'm more conventional. conservative. I like to pay off my payments. As a matter of fact, I pay off my mortgages fast. I'm not, that's my attitude. I don't like to refinance. My mindset is don't ever refinance because you reset the clock, et cetera. But that's another discussion. Okay. 

Homes for sale near Apple

Exploring Homes Near Apple and Mountain View


Quickly, homes near Apple.

This one is not my listing. This is West Acres is for sale for 2. 7. So just think about how much that's going to cost you. And it's a three bedroom, two bath built in 1961. And it's a pretty-looking ranch house. Completely updated inside. Nice looking. Looks like the HVAC is original. But they redid the kitchen.

They could have just put new doors on. But I don't know. I haven't been there. And then the REO of the week. This is in Menlo Park, and it's a measly 3. 8 million. Five bedrooms, four baths. Brand spanking new. Two beds were built in 2022. There are a couple of these that are going for sale because it looks like the developer lost their their sales their loan, and they had to foreclose on their developers.


There are actually two of them here, that are for sale just like this. And these are brand spanking new. I don't think these are even lived in. Or maybe they are, but yeah, no, they're not. See they're brand spanking new.

Mountain View home of the week

So if you can afford that, let me know. I'll go take it to you. And Mountain View home of the week is a measly 2. 7 million. It's funny. Menlo Park, 3. 8, 2, 800 square feet built in 2022, a million dollars less, which Roughly speaking, that's about 27, 26 percent three bedroom, two bath 1954, tiny little thing, 1500 square feet.


So tell me where would you rather live?


It's nice that they do these floor plans. I'm telling you, I do floor plans for all of my listings. I think it goes a long way. And it really helps the buyer view the market what's for, what the house looks like, what the house feels like, what the flow is like, and how they can use it. And it really helps.


And I see a lot of agents just don't take that extra step. So if you're an agent, I suggest you do that. Okay. There are only two houses and two pictures. I have no idea why you would ever do that. That's crappy. It's only been on the market for three days. So maybe they're just waiting for their pictures to come in.


It's a possibility. So there you go. Okay. 

REO of the Week

Conclusion: The Importance of Building Equity


Today we talked about, let's see, how much money do you need to buy a house? 20%, 3%. If you're VA or USDA, it could be zero, but you have to be able to afford the payment, right? Now the rent versus buy calculator. We've talked about how much it costs and how much money you're losing every day.


San Jose is 500. 545 a day. You're losing an equity bill. Oh, but Vito, it's so expensive to buy a house. Yeah, I understand. I understand it's expensive. I don't, I, but if you're making money and you're sitting paying somebody else's mortgage or you're in an apartment, you're losing another 545 a day in equity by something.


And I don't care if it's a townhouse, a condo, or whatever, get into it, start building equity into your own life. It's your own wealth. For any other reason the U S housing market. Oh, we didn't talk about that. We'll talk about that tomorrow. Homes for sale in Apple near Apple Mountain View, home of the week, and REO home of the week.


I'm Vito with Abitano. Hope this helps. Actually, we didn't even go into this. Okay, so this right here is my San Jose snapshot, Santa Clara County snapshot. And the reason why it looks different is because I lost my file, the actual file. So I'm building off of this going brand new, and I'll have these filled out for the beginning of the year so I can have a nice chart for you.


But right now we have 293, last week we had 191. So supply is going up, not where we need it to be, but supply is going up. Yeah. So that's all I'm going to tell you. Alright, I'm Vito with Avatano. I'll see you out there.


Vito Scarnecchia Real Estate Broker, Veteran, Dad DRE#: 01407676 We’re Hiring! 408-705-6817 Vito@abitano.com Website: abitano.com https://www.onereal.com/vito-scarnecchia-1 update your home value: https://hmbt.co/bT7qRJ RELOCATION@ABITANO.COM FREE DESKTOP APPRAISAL https://www.propertyrate.com/agent/vitoscarnecchia If you are moving ANYWHERE in the world - Let me know! I know a LOT of AMAZING Agents! Book appointments here: https://calendly.com/abitano/15min Home Buyers Course YT YouTube.com/SanJoseLiving IG https://www.instagram.com/abitanogroup/ FB https://www.facebook.com/vito.scarnecchia/ LI https://www.linkedin.com/in/vito-scarnecchia/ Blog http://blog.abitano.com/ POD https://spotifyanchor-web.app.link/e/oxdH1Hwfcvb Professional Photography by Kim E https://photosbykime.com / Local Real Estate Market and Home Value Report https://hmbt.co/bT7qRJ Financial Intelligence https://docs.google.com/forms/d/e/1FAIpQLSc0R5pjHIAPguZ5GDEB-fTbGJXKpWK3coK9Khymv_GTWkMnyQ/viewform?usp=send_form https://www.onereal.com/vito-scarnecchia-1 Willow Glen's five most expensive homes https://youtu.be/3A_E2ck0ePg





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