Summer 2024: How to Buy a House in Santa Cruz?
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Discover how to buy a house in Santa Cruz from all-star agent and lender, Megan Kilmer. As a Santa Cruz local, she has a deep passion for the area, which she combines with her vast knowledge of real estate. Dive in and discover how you can buy a house in Santa Cruz!
It’s summer, the sun’s out, the surf’s up, and of course, the Santa Cruz housing market is hot, hot, hot. We are experiencing another record-breaking median house sales price in Santa Cruz. Since January 1, 2024, prices have increased 10.6%. In May, the average 30-year mortgage rate fell to 7.03%, dropping 0.19% from the 2024 high reached in April. The Fed has expressed hesitation around lowering rates due to higher-than-desired inflation. With all this, how do you buy a house in Santa Cruz?
What does this all mean for homebuyers and Santa Cruz County? It means that it’s still a seller’s market. When I talk to homebuyers, it’s vital to set expectations. Home sales fell last month by 1.9%. It’s a struggle out there for homebuyers.
But should you give up? Absolutely not! Homeownership happens when you’re ready, not when the housing market is ready. Maybe you got a promotion, maybe your tax return is burning a hole in your bank account, I’m sure you’re sick of renting, or you’ve grown out of that two-bedroom. Regardless of your ‘why,’ we gotta get you that house!
There is an old proverb –
“The best time to plant a tree is ten years ago, the second best time is now.”
Let’s apply that to the housing market.
So here’s what we do-
The Game Plan:
Step 1: Preapproval
Getting preapproved for a mortgage means that a lender is willing to give you a loan for a specific amount of money based on your finances.
Preapproval is a detailed process that examines your finances, credit, and work history to determine what monthly payment you can afford. Get ready to submit a lot of documents, it’s not simply a form you fill out online.
If you’re trying to sell a home and buy at the same time, be sure to discuss your options with your lender.
Step 2: Real Estate Expert
Get a local real estate expert. Local is the key. Be sure to interview multiple agents so that you can feel confident in your decision to hire a realtor.
Your local agent will have personal knowledge of the area, including houses that are coming soon. Additionally, a local real estate age will have ways to utilize local lending program options.
Here in Santa Cruz that’s Measure J and Measure O. There’s also Watsonville City downpayment assistance and the list goes on!
Step 3: Discovery
Cast a wide net. Let’s say you’re preapproved for $1 million. Don’t just throw your hands up in the air because the median sales price right now is $1.6M for a single-family home.
Change your criteria to townhomes and condos. In addition, start looking up in the San Lorenzo Valley. Oftentimes, clients start in one area but end up buying in a different area. Keep an open mindset. You never know where your home may be!
Or, let’s say you’re preapproved for $375k. In California, this may feel like there’s no home for you, but there are options! However, if you truly want a large home with a two-car garage and a yard, you may have to move out of the area.
Step 4: Sweeten the Deal
I told you this is a seller’s market, so what we’re gonna do is butter up the sellers. We call and get intel.
As the buyer’s agent, I’ll ask the seller’s agent if the seller needs a quick close, something slow, or possibly a rent back. We ask the seller’s agent about their expectations, and we give them exactly what they want. That’s how we get into a contract. That’s how you get your offer accepted. And that’s how you beat the competition.
Step 5: Inspection
We do our due diligence. We hire a professional to do a top-to-bottom home inspection, including quotes for the work. They’ll look in the crawlspace, check for bugs, and highlight any imperfections.
This is what we can use as our bargaining tool. Now we can ask the seller to come down on the price because we are going to have to do ‘x’ amount repairs.
Usually, there’s some back and forth at this point. The seller may agree to all, some, or none of the requested concessions. You then get to decide what to do. You are able to walk away from the home at this point, but generally, both parties are flexible and able to come to an agreement.
Step 6: Appraisal
We buckle up. The offer is in, we’ve done our due diligence. Now the bank visits the house to do an appraisal, where they will determine the value of the house from the bank’s perspective.
In Santa Cruz County we have not seen a lot of properties that do not appraise. That being said, I will always provide a comparative market analysis to the appraiser to justify whatever price we’ve offered. This helps ensure the property appraises at your price point.
The appraisal needs to come in before the loan closes because a financial institution wants to make sure they are making a good investment.
Step 7: Close the Deal
Sit tight. As long as you make no big purchases, don’t open any new lines of credit, don’t sign or co-sign any new loans, don’t buy a car, don’t finance furniture, and don’t lose an income source, your loan closes. You’re now the owner of your home! 
If you’re ready to conquer the Santa Cruz housing market, let me help you ride this wave. Reach out with your questions regarding real estate and lending in Santa Cruz County – I got you!
