Home News A $9,000 mortgage in San Jose? That’s ‘reasonable,’ realtors say

A $9,000 mortgage in San Jose? That’s ‘reasonable,’ realtors say

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For 15 years, Matthew Quevedo and his wife A’Dreana moved from one apartment to another in San Jose.

At the age of 18, they both started at $ 900 a month in a one-bedroom in the Seven Trees area and earned $ 12 an hour at the Home Depot. But in October 2020, after years of saving, they got part of the American dream. The couple bought their first home. Two bedrooms and one bathroom between North Side and Japantown. It is within walking distance from San Jose City Hall, headed by Kebed, to San Jose Councilor Matt Mahan. It costs $ 775,000 and their mortgage is $ 4,000 per month.

But they are on the lucky side. A New report According to real estate giant Zillow, San Jose’s average mortgage is currently $ 9,136 per month, including homeowners insurance and taxes.

That’s a 51% increase from this time last year, up from $ 8,664 in May.

Kebed, who has a six-year-old son, said he was lucky. When the pandemic began, the couple moved with their parents and took a series of breaks when looking for a home. They found a bank that was willing to give them a loan with a 5% down payment. Shortly before they moved, former homeowners filed a $ 5,000 plumbing invoice after a pipe ruptured in a 101-year-old house.

“So I think the main word in our story is pure luck that doesn’t speak well to Silicon Valley homes,” he said.

What is the reason for the surge in mortgage payments in the 10th largest city in the United States? The simple answer is supply and demand, but it’s not the only one.

Brett Cabinas, chairman of the Silicon Valley Real Estate Association, said the rise was due to “a combination of rising prices and rising interest rates in the real estate housing market.” Caviness called monthly mortgage payments in excess of $ 9,000 “very reasonable.”

Average home prices in San Jose in May were just over $ 1.7 million, up 22.4% from last year. Interest rates calculated at 5.78% in Zillow’s report have almost doubled since January.

In addition to rising interest rates, mortgage prices are also being boosted by South Bay homebuyer demographics. Julie Wis, a realtor in South Bay, Compass, said most first-time homebuyers are high-paying, but young technical workers in their thirties who don’t have enough savings to pay a large down payment. is.

This means that your mortgage will grow in size and your overall statistics will improve.

“Young buyers were too young to save a lot of money, but they are making more money than they ever dreamed of,” Wis told San Jose Spotlight. “And, obviously, this all happened before interest rates went up, and then suddenly the affordability went down.”

It may sound ridiculous, but Wyss says a $ 9,000 monthly mortgage is feasible for a family with an annual income of $ 216,000.The Average annual income Last year in Silicon Valley it was $ 170,000 with a median income of $ 138,000.

Many Technicians still work from home And if more home office space is needed, the interest in single-family homes is much higher than in town homes and apartments, Cabinas told San Jose Spotlight.

Despite demand, Wyss believes the market is stagnant. Wis, a 15-year real estate agent in the region, said her 10 active lists in South Bay haven’t received much attention. She said rising interest rates and lack of liquidity are beginning to affect sales.

“The open house is dead. We’re saving $ 100,000 every two weeks. Nothing,” Wis said.

Cabinas believes that the housing market is in the middle of an adjustment period, but it has not yet affected pricing.

Homebuyers who can buy “luxury homes,” which Caviness defines as a list of $ 4 million or more, can buy mortgages and may not be affected by the increase in mortgages. But “entry-level” homebuyers looking to buy in the $ 1 to $ 2 million range have been hit hardest.

1 silver lining Prospects with tight budgets are less competitive.

According to Caviness, few buyers can offer a 20% down payment for a $ 2 million home, or a $ 400,000 home. But especially considering Silicon Valley wages, a 10% down payment, or $ 200,000, may be more reasonable.

“Obviously it’s still a lot of money, but it certainly could open the window to buyers’ new demographic pools,” said Cabinas.

Mr Kebed said his family is running within budget. He compares his mortgage to his rent payment. According to Zumper, the average rent for a two-bedroom apartment in San Jose is $ 3,195.

But Kebed and his wife were fed up with having to leave the apartment as their career progressed.

“That was probably the biggest thing for me,” Quevado said. “I was just tired of moving from place to place, and the uncertainty of where we will live next.”

Eric contact him [email protected] Or @erichejourno on Twitter.

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