Ballin' On A Budget - Buying Your First Home In The Silicon Valley
If you think about it, we’re pretty lucky to live here in the Silicon Valley. One of the best parts of living in the Silicon Valley is that it’s the land of opportunity. Amazing technologies are developed, fortunes beyond the imagination are made and some of the brightest minds in the world land here to stake their claim on their legacy.
To every ying though, there is a yang. With these amazing technological advances and an almost neverending stream of newly minted millionaires on the daily, issues of affordable housing, and even enough available housing inventory for potential buyers have caused many to recoil, taking the mentality that they just aren’t meant to ever own a home in the valley.
While it is impossible for me to say that everyone in the valley can afford to buy a home, I think there are many that have written themselves out of the homeownership equation needlessly. To those ends, today I’d like to share a few tips for any of you out there that are first time buying in the Silicon Valley on a budget.
I think it’s safe to say that almost everybody’s eyes are bigger than their stomachs when it comes to envisioning themselves in their first home. Remember, homeownership is a marathon, not a sprint. It may not be realistic for you to land in the exact neighborhood you’ve always dreamt of, right out of the gate, or even in the size of home you were originally envisioning.
One of the great things about the valley is the prices of homes, over time, tend to consistently increase in value. While your first home may not have every single thing you’ve dreamt of, look at it as an investment in your future. Over time, you may be able to leverage that first purchase, sell it and move into another home that checks off more of the boxes of your dream home and continues to build value beyond your initial investment.
Don’t buy too high
No matter how well you inspect a home and how “move-in ready” you think it is, remember that all homes are going to need work. The worst is when you aren’t planning to have to make a repair and an emergency dictates that you are going to be quickly out of pocket, paying a lot of money. Aim for a house that’s a little less than you can afford so you have some cushion. You need reserves to deal with the landscape, a broken water main, a heater that breaks, etc.
Don’t be seduced by shiny objects
Granite counters, stainless steel appliances and beautiful tongue in groove hardwood floors are fantastic, but you can add those later. Instead, value the things that are super important, and actually super expensive if you need to install/replace them. For instance, a new roof, a new HVAC system, new insulation, or a new water heater.
Don’t buy perfect
I recently wrote an article about buying move-in ready versus buying a fixer-upper. If you are new to the market, you should definitely consider whether a fixer-upper is right for you. A home might be turnkey, but you are for sure going to pay more for that home. If you buy a house that needs a little TLC, you can treat it like an investment and likely pick it up for a reduced purchase price.
Play in your league
Nobody wants to get outbid on a home, but you have to set in your mind that it’s going to happen. If it starts to happen too frequently you may try to put some science to this to try and avoid losing out on the offer process on future homes you end up wanting to try and purchase. If you’re constantly getting beat out in your price range by higher offers or all-cash buyers, try looking at a lower price range where you have more leverage.
This may perhaps be the most obvious tip of all, but remember that the market in the Silicon Valley is a tough one. Come in prepared, but be willing to wait, and most of all stay the course. If you are committed, it will eventually happen. Once you get an offer accepted and move into your new home, the law of averages says you’ll be happy that prior home(s) you put an offer on didn’t work out because the home you are in now is so much more of what you wanted.