How to Buy a Home in the Bay Area: Updated for 2020

We’ve written about the home-buying process before, with an emphasis on the San Francisco Bay Area. But a lot has changed over the past few months. The coronavirus (COVID-19) situation is the most prominent change, of course. But there have been other real estate and economic developments as well.

So, we thought it was time for an updated look at this subject. Here’s how to buy a home in the San Francisco Bay Area, as of spring 2020.

How to Buy a Home in the Bay Area: 2020

An entire book could be written on the home-buying process. But you’re in a hurry. So we’ve broken it down into seven key steps.

We’ve also taken into account current economic conditions, the ongoing COVID-19 health crisis, and other timely factors. Without further ado, let’s talk about how to buy a home in the San Francisco Bay Area, as of 2020.

1. Get your financing squared away.

This is actually several steps rolled into one. Before you contact a real estate agent or start house hunting, it’s a good idea to get your financial situation in order.

Start by establishing a monthly housing budget for yourself. This is the maximum amount you’re comfortable spending each month towards your mortgage payment and other housing costs.

Next, research the different types of mortgage loans that are available for Bay Area home buyers. At a minimum, you want to understand the difference between conventional and government-backed mortgage loans, and the distinction between conforming and jumbo loans.

If you’re planning to use a mortgage loan to buy a home in the Bay Area, you’ll probably want to get pre-approved before you start house hunting. Pre-approval is a preliminary mortgage qualification process that helps you determine how much you’re able to borrow. This, in turn, helps you narrow your Bay Area home search to a specific price range.

Please contact us if you’d like to get started with pre-approval.

2. Understand current house-hunting protocols for 2020.

The coronavirus (COVID-19) pandemic has changed the way real estate transactions are handled in the Bay Area and nationwide. As a home buyer, you want to have a basic understanding of these protocols and procedures.

The first thing to know is that open houses and other group home tours are a no-go. At least for now. The states advises real estate professionals to show properties only to individuals or households.

Also, most real estate agents are providing hand sanitizer and opening all doors and cabinets inside the home. These simple but effective modifications allow the Bay Area housing market to continue moving forward while safeguarding public health.

3. Be prepared for limited housing supply.

When buying a home in the Bay Area, you’ll want to give yourself plenty of time to locate a suitable property. That’s because housing inventory is somewhat limited right now.

Real estate supply was low going into the coronavirus situation, and it “shrank” even more as some sellers pulled their homes off the market.

According to a May 2020 report from the California Association of REALTORS®:

“Total active [property] listings continued to decline on a year-over-year basis for the 10th consecutive month, and the 25 percent decrease in listings was consistent with what has been observed before the shutdown.”

We might see an increase in the number of properties available, as we move into summer 2020. But even if that happens, housing inventory levels will remain below what’s considered to be a “balanced” market.

As a Bay Area home buyer, you’ll want to start your housing search earlier rather than later to give yourself time. It also helps to be flexible and open-minded, when it comes to the features you want in a home.

Lastly, be aware that some housing markets in the Bay Area have more supply than others. So you might have to shift your housing search to those markets with more inventory, thus increasing your chance for success.

Related: Summer 2020 home-buying trends

4. Research local housing market dynamics.

News reports often talk about “the” Bay Area real estate market, as if it’s one big cohesive unit. In reality, it’s made up of dozens of micro-markets with their own unique supply and demand fundamentals.

Before you attempt to buy a home in the Bay Area, spent some time researching current market conditions in the area where you plan to buy. With all that has happened in 2020, this kind of localized research is more important than ever.

Fortunately, much of this information is available online. You can find it by doing a Google news search for your city followed by the words “housing market.” Look for information relating to home sales, inventory levels, and other factors that might affect you during your housing search.

5. Review comps, make an offer, and negotiate.

So, you’ve found a home in the Bay Area you want to buy. What’s next?

First, you’ll want to evaluate the seller’s asking price based on recent home sales. Some sellers determine their list prices based on careful market research. Other sellers pull a number out of the clear blue sky, or so it seems. The only way to know the difference is to review recent sales data.

This is what real estate agents refer to as comparable sales, or comps. And you can find this kind of information online as well.

Start by looking at websites like Zillow and Realtor.com. Filter the results to show recent home sales in the area where you want to buy. Look for homes of similar size and features to the one you want to purchase.

This will give you some sense of what buyers have paid for similar properties in recent weeks. You can use this information to support your offer.

6. Have the home inspected (optional).

Home inspections in the Bay Area are usually optional. The government doesn’t require you to have one, nor do mortgage lenders. You’ll have to have a home appraisal if you’re using a mortgage loan. But the property inspection is an optional step.

With that being said, it almost always makes sense to have a home inspection when buying a house in the Bay Area. These inspections typically cost somewhere between $350 and $500, depending on the size and complexity of the property. That’s a relatively small price to pay for the peace of mind you receive.

Your home inspector works for you, the buyer. His job is to examine the property inside and out to identify any structural or safety issues. He’ll present his findings in a detailed report, for your benefit.

7. Prepare for the closing process.

In the Bay Area, buyers and sellers can handle their real estate closing procedures separately. The days of everyone sitting in a conference room together are behind us. These days, much of the process can be handled electronically and remotely (in keeping with social-distancing guidelines).

Shortly before closing, you will receive a document that lists all of the closing costs you have to pay. You can then arrange for a cashier’s check or wire transfer to pay for those costs.

As a home buyer, you’ll have quite a bit of paperwork to sign on or before closing day. Buyers tend to have more paperwork than sellers, since they’re assuming ownership of the property.

Have Mortgage Questions?

So there you have it, a quick review of how to buy a home in the Bay Area, fully updated for 2020.

If you have questions about any of the mortgage-related topics covered in this article, please contact our staff. Bridgepoint Funding has been meeting the needs of Bay Area home buyers for nearly 20 years. We can help you get your financing lined up in advance, to make your home search more efficient and effective. We look forward to hearing from you!