Please help! Should I buy this house in Santa Clara (San Jose: mortgage, loans)

[thinkcali]

This forum is my hope to find more inside information on City of Santa Clara housing. I found this nice little property at Santa Clara, near homestead and lawrance. There is library, shops, and hospital nearby. However, many of my friends told me the school, especailly the high school is poor comparing to cuptertino and sunnyvale. The poor school distract will affect the housing value in the future when I sell it. But boy, who could afford house in cupertino now! I am torn between spending my last penny on a house in nicer school district, or live a more comfortable life in santa clara. Tell me what do you think!! Thanks a bunch

[Luke9686]

The school district may not be as good as Cupertino, but it is still a great district. The house won't lose value just on this district. It's a good area.

I would be more worried about this housing crisis dropping the value of the house.

[misplaced Idahoan]

I believe Luke has it right. My house was over-priced about 30 years ago, now it's outrageously and ridiculously so. We aren't in the best school district, but if parents know how to work with the system, almost any school district can meet the children's needs.

[thinkcali]

Originally Posted by Luke9686

The school district may not be as good as Cupertino, but it is still a great district. The house won't lose value just on this district. It's a good area.

I would be more worried about this housing crisis dropping the value of the house.

Hi, Thanks for the reassurance and concern. I am optimistic that the crisis will not affect the centeral area significantly. Never underestimate the buying power of bay area One good thing about the Santa Clara area, at least I think it has not been inflated by realters yet...

[thinkcali]

Originally Posted by misplaced Idahoan

I believe Luke has it right. My house was over-priced about 30 years ago, now it's outrageously and ridiculously so. We aren't in the best school district, but if parents know how to work with the system, almost any school district can meet the children's needs.

I agree with you entirely. Parents need to do the dual diligence to work with the system, and help to improve the school.

[sonarrat]

Originally Posted by thinkcali

Hi, Thanks for the reassurance and concern. I am optimistic that the crisis will not affect the centeral area significantly. Never underestimate the buying power of bay area One good thing about the Santa Clara area, at least I think it has not been inflated by realters yet...

It's similar to San Bruno in that the perception of the town is reduced by the airport-flightpath thing, so property values tend lower. But you're looking at one of the more desirable parts of town, and I think it's out of the flightpath too.

[DMenscha]

Originally Posted by thinkcali

Hi, Thanks for the reassurance and concern. I am optimistic that the crisis will not affect the centeral area significantly. Never underestimate the buying power of bay area One good thing about the Santa Clara area, at least I think it has not been inflated by realters yet...

Just a clarification. Realtors don't make the market, they service the market. People that are buying or selling are the market

[Alexus]

Originally Posted by thinkcali

This forum is my hope to find more inside information on City of Santa Clara housing. I found this nice little property at Santa Clara, near homestead and lawrance. There is library, shops, and hospital nearby. However, many of my friends told me the school, especailly the high school is poor comparing to cuptertino and sunnyvale. The poor school distract will affect the housing value in the future when I sell it. But boy, who could afford house in cupertino now! I am torn between spending my last penny on a house in nicer school district, or live a more comfortable life in santa clara. Tell me what do you think!! Thanks a bunch

I would advise you to buy a house in the highest ranked school district that you can afford. Cupertino is expensive of course, but Sunnyvale is slightly cheaper and there is an area of Sunnyvale that has schools in the Cupertino school district. You also get more house for your money in Sunnyvale.

Focusing on the school district is a good way to find a house that is relatively immune from the fluctuations in the financial market. Buyers of these homes are more than likely newly arriving foreigners who tend to be very educated (PhDs or 2 Masters degrees + their own business), they tend to have very well-paying , secure jobs, and they tend to either put a greater portion down and finance through their own banks or pay for the house outright. Many of these people have 3 to 4 families to one home, with 7-8 wage-earners. Education is paramount here and they are willing to combine their resources to purchase a home, even outbid anyone, for a home in a school district that has high test scores. Test scores drive their buying habits. The higher, the more likely that they will pay whatever they must for a home. Buyers also tend to be current homeowners who purchased a long time ago, who have enough equity to purchase a home outright or with most down. Both of these types of buyers are not prone to market fluctuations. They don't get loans that are likely to rise and fall with changing interest rates. They work, and focus on making sure their kids do exceptionally well in school, which drives up the reported scores, which attracts more of the same types, who outbid for homes, which drives up the value, and the cycle continues independent of market fluctuations. One of the homes I own is in this portion of Sunnyvale, and I have seen this house increase from 335K in 1994 to 1.3M now. When the valley takes a dive in housing prices, these homes will only increase at a slower rate. When the valley is booming, these homes will rise faster and yield higher returns.

I say, invest in the better school district now. You will gain more benefit later. Santa Clara may be nice, but it is far from being perceived as a location that foreigners are willing to outbid others for. Its prices will therefore be more readily affected by market fluctations in interest rates because the buyers of these homes are not likely to be people who had the means to pay for a home outright. If they did, they would've bought in a better location like Cupertino or Sunnyvale portion of the Cupertino School district). Such people are likely to have financed their mortgage, of course seeking the best rate, and prone to market fluctuations if they got a 3/1, 5/1, or 7/1 ARM just to keep payments down. Because they don't live in the best school district as determined by those who are increasingly moving into the area (Asians, Indians), they are not going to get as many bidders on their homes. This means that when valley market prices take a dive, these homes will dive faster and further. When the valley booms, these homes with rise slower and not as high.

Just my opinion.

[thinkcali]

[quote=RomanInSF;2135048]I would advise you to buy a house in the highest ranked school district that you can afford. Cupertino is expensive of course, but Sunnyvale is slightly cheaper and there is an area of Sunnyvale that has schools in the Cupertino school district. You also get more house for your money in Sunnyvale.

Focusing on the school district is a good way to find a house that is relatively immune from the fluctuations in the financial market. Buyers of these homes are more than likely newly arriving foreigners who tend to be very educated (PhDs or 2 Masters degrees + their own business), they tend to have very well-paying , secure jobs, and they tend to either put a greater portion down and finance through their own banks or pay for the house outright. Many of these people have 3 to 4 families to one home, with 7-8 wage-earners. ... ]

I have never heard about this before. Even if it's true, hopefully this situation is not common otherwise how would the neighborhood keep it's value?

Since you mentioned house value appreciation for Sunnyvale and Cuptertino, here are my thoughts:
1. I plot medium and mean house price of sunnyvale, cuptertino,santa clara, milpitas, san jose, saratoga, etc. since 1997. Guess what - the appreciation percentage is very similar, with Saratoga the lowest! Only recent 2-3 years sunnyvale price has shoot high, with good reasons.

2. At the relatively less expensive yet nice areas such as Santa Clara, Milpitas, San Jose, 80% of buyers are Asian and single income families. I see potential of schools getting better over years.

[Alexus]

Originally Posted by thinkcali

I have never heard about this before. Even if it's true, hopefully this situation is not common otherwise how would the neighborhood keep it's value?

It is very common. Neighborhoods with schools with high test scores are always in demand. That's how value is maintained.

Originally Posted by thinkcali

Since you mentioned house value appreciation for Sunnyvale and Cuptertino, here are my thoughts:
1. I plot medium and mean house price of sunnyvale, cuptertino,santa clara, milpitas, san jose, saratoga, etc. since 1997. Guess what - the appreciation percentage is very similar, with Saratoga the lowest! Only recent 2-3 years sunnyvale price has shoot high, with good reasons.

There are differences among zip codes and within zip codes, neighborhoods. How do you account for that? Sunnyvale, for instance has 94087. Within 94087, there are neighborhoods surrounding Wolf Ave that are not valued as highly as the neighborhood around Hollenbeck and Cascade for instance. On Hollenbeck, part of the street serves the Fremont High which is not as desirable. The other part serves Homestead High which is a top high school. Home values on the Homestead side are in greater demand than those on the Fremont side, but both homes are in the 94087 zip code. Look at the figures and it says that the homes in 94087 increased 44% for instance. What this really means is that the homes in the Homestead portion increased by much more than that, and the homes in the Fremont portion increased by less than that. Its about perceptions and boundaries, school scores on standarized tests, and to some extent the appearance of affluence.

Originally Posted by thinkcali

2. At the relatively less expensive yet nice areas such as Santa Clara, Milpitas, San Jose, 80% of buyers are Asian and single income families. I see potential of schools getting better over years.

Where did you get the 80% figure? Less expensive in this area equates to more problems. More broken families, more parents whose skills are not in high demand, lower wages, more problem kids, not as high an emphasis on high academic achievement, lower test scores, more non-English speaking kids, more school resources needed for problem kids, and so forth. I would never advise someone to buy a house in one of these areas because it has the POTENTIAL to get better. This may never materialize.