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Buying a House in the Bay Area: House Availability Guide

The Bay Area is one of the most desirable locations in CA, and the price reflects that. Learn more about Bay Area housing availability here.
Updated Jan 01, 2018
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With the competitive housing market across the state of California, many first-time buyers are running the gauntlet of finding the right price for the right home.
Additionally, the Bay Area is one of the fastest-growing markets in the state, creating a myriad of obstacles to cross to find that perfect home.

Why Should You Buy a House in the Bay Area?

Residents love the Bay Area for the temperate weather, stunning natural beauty, and world-renowned arts and dining scene.
From home-focused factors like bedroom and bathroom quantities, storage space, and design layout to more community-oriented elements like accessibility, school districts, and location, finding a home that meets your criteria and fits your budget can be a sizable task.
There are many things to consider when setting out to buy your first house. Read on for some effective tips and actionable advice for the Bay Area housing market, whether that’s Berkeley, San Mateo, Alameda County, or anywhere else.

How To Set up a Proper Home-buying Budget

Buying real estate in the Bay Area goes far deeper than simply saving up for a down payment on a home. If you are planning to purchase property in Silicon Valley or burgeoning Oakland, you will need to be armed with extra funds to secure your purchase.
The first thing you’ll need to budget out is your initial purchase price. Secondly, you’ll set your sights on saving enough to handle closing costs with a lender and any possible legal or escrow fees.
Thirdly, you’ll have to carve out an allotment of funds in the event you find yourself in a bidding war. Depending on your location and budget, some of that may need to be allocated to renovations that you may want or need in the new home you are purchasing.
The main takeaway here is preparation. It is impossible to fully forecast the exact amount of money you will need to secure the home of your dreams. It is, however, quite possible to make sure you have enough to secure a successful voyage in the Bay Area’s housing market.
A major part of setting up your budget is figuring out what size mortgage you will qualify for. Possible factors like how much debt you carry, your monthly and annual income, and how long you’ve been working at your current job could result in a mortgage rate that falls short of your expectations.

Bay Area Home Buying Tips

  1. Buy below your budget
  2. Watch out for financial risks
  3. Consider the location
  4. Factor in your commuting details

Buy Below Budget

You may notice at first glance that many homeowners are listing their home prices below market value. This is a deliberate tactic to entice first-time homebuyers and their realtors to come to take a look. Real estate agents often recommend listing single-family homes low to create the impression of affordability and start a potential bidding war.
More buyers mean more competition. More competition means higher and higher bids that reach far above the initial house price that you see on Zillow. Bidding wars such as these drive up the real estate sale price far higher than initially posted for—a widespread tactic in the Bay Area. For example, homes in Berkeley, CA, have sold for 17% more than the asking price, and homes in Oakland have sold for 11% more.
Keeping this in mind, it would be good practice to focus your house hunting on homes for sale moderately to significantly below your budget. Then, you’ll have some wiggle room if other interested buyers join the competition.

Watch Out for Financial Risks

Make sure you’ve taken steps to build up your credit and pay off your loans, or at least pay them off in a steady and timely fashion long enough to guarantee you a more sizable loan offer. Most sellers won’t so much as look at an offer if it isn’t accompanied by a mortgage pre-approval.
The bank may offer you a more sizable mortgage once you’ve built up your credit and paid off your loans. That doesn’t necessarily mean you should accept it, however. For that, you need to do your homework and investigate the place you want to live in.
Approval for a high mortgage while just barely being able to pay it off isn’t a healthy financial risk to accept once you’ve taken property taxes and homeowners insurance into account—not to mention utilities, renovations, and closing costs.
An unfortunate reality is that many first-time homeowners can fall victim to this mistake and become “house poor,” finding themselves unable to keep up with living expenses after making their monthly mortgage payments.

Consider the Location

The San Francisco Bay Area is not localized solely to San Francisco. It spans its titular city across much of urbanized Northern California, including cities like Oakland and San Jose. This expansive mass of land allows for many different places to choose from, each one better or worse for your particular lifestyle.
Some areas provide a higher volume of local entertainment. If neon-streaked nightclubs, live music bars, and lively nightlife are your purview, it may behoove you to look into more urban areas with a denser volume in population.
Young families may want to be farther away from such amenities, however. You may rather look into local schools, as well as public parks and more family-friendly activities hosted nearby. Whatever your situation, it is important to scope out the best neighborhoods to best suit your lifestyle.

Factor in Your Commuting Details

Walkable downtown hubs are certainly considered “it centers,” where people may find attractive lifestyle amenities. They are also capable, however, of pricing people out when it comes to a burgeoning housing market. Considering future developments may be an alternative that comes with several added bonuses.
Neighborhoods abundant with public amenities could be a selling factor for many young families or mature individuals looking for a sustainable future for themselves. Transit Oriented Development (TOD) is a push represented by several Bay Area regional agencies that provide a glimpse to the curious buyer of the region's future.
Sustainable communities developed around accessible public transport find more diverse communities that are inclusive of various populations. This spectrum spans from young people, like students and career-minded upstarts, to elderly folk who have found a viable place to settle down.
Walkability is perhaps the biggest selling point of transit-oriented developments. Due to increased foot traffic in areas around transportation hubs, local businesses have a chance to thrive when supported by their own community.
Convenience is not the only reason to want public transit available. Home values are up to 24% higher in nearby public transportation. Real estate purchases in these developing Bay Area communities offer buyers a place to invest in their futures.
Improved public transportation leads to a better quality of life due to the improved walkability of neighborhoods, which saves time spent commuting to work and getting to other places. People also see a decrease in car upkeep and maintenance costs and a decline in overall automobile dependence.

What Are ADUs?

ADUs, or accessory dwelling units, are secondary housing units on single-family residential lots. Additionally, ADUs can be a lot of other things, including:
  • Housing opportunities
  • Passive income opportunities
  • Work-from-home opportunities

Housing Opportunities

Depending on your ambitions with your Bay Area real estate, whether to flip or to nest, it is important to consider how much land you’re in the market for.
Ever since the Gold Rush of 1849, Californians have been experts at seeing the opportunities hidden in plain sight. Whether you have available yard space, an unused basement, or an idle attic, you might have room for a new ADU.
ADUs and the Bay Area
The beauty of ADUs is in their versatility. Many homeowners construct these units to house in-laws and young adult children looking to move to a more independent space. Other homeowners build these spaces to serve as work-from-home offices and home studios.

ADUs Offer Passive Income Opportunities

Some might choose to rent out their ADU to long-term tenants as a source of passive income. The Bay Area is home to several colleges and universities, including Stanford, UC Berkeley, the University of San Francisco, and Cal State San Jose, to name a few. Student housing is becoming more and more unaffordable—ADUs offer the opportunity to provide incoming students with affordable housing.

Work-From-Home Opportunities

An ADU office is often the ideal workaround for those preferring to work from home but finding it difficult to share a home with their employer metaphorically. Some reasons professionals may benefit from a truly separated workspace include:
  • A space dedicated to focusing on work.
  • Avoid embarrassing cameos on zoom calls.
  • A way for you to disconnect at the end of the day.
  • An organized and balanced relationship between your work life and personal life.
With Silicon Valley and the Google Campus in Downtown San Jose, home prices are soaring; even tech workers are struggling to afford Bay Area homes and real estate. ADUs can serve as a fantastic working location that is removed from the home, as well as from traffic and rising rent office prices.

Why Should You Build an ADU?

ADUs are a fast-growing part of the Bay Area real estate market that offers a bevy of benefits for homeowners.
These accessory dwelling units can provide a steady revenue of income for single-family-owned properties. They also provide an instant gain in equity in your home and long-term investment in your property’s value, possibly raising it by tens or hundreds of thousands of dollars.
The approachable and professional expertise found here at Cottage is suited perfectly to construct exactly the kind of unit you want.
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