The lack of money available has dampened the real estate market in San Jose. Some areas like Blossom Valley, East San Jose and the Evergreen area of San Jose have felt the effects of the sub-prime loan financial trouble. Some areas less affected by the sub-prime borrowing include Los Gatos, Cupertino, and Mountain View. Major lending institutions stopped funding the 100% loans. Recently, Countrywide just announced that they too would not fund zero down loans. Countrywide is the nation's leading mortgage lender.

Another blow to the real estate market is the recent changes in jumbo loans. Jumbo loans are becoming more expensive than they have been in recent years. The difference in price between Jumbo loans (loans over $417,000) and conforming loans (loans under $417,000) has always been negligible. Today, the cost difference is substantially greater for buyers. This is a major cause for concern for most buyers because most homes in Silicon Valley fall in the "Jumbo Loan" range.

Today, a mortgage loan may be tougher to get if you have no money to put down and it might cost you more. However, there is still money available for qualified buyers who want to buy a home. Bank of America still has an excellent loan program for first time homebuyers called the ACORN program. Buyers with good, stable employment, good credit, and at least ten percent to put towards a down payment are still getting loans at most lending institutions.

Buyers have a "wait and see" attitude. They are looking for interest rates to drop and hope to take advantage of a slow real estate market. Many patient buyers are following one or two homes steadily and hoping that reductions lead to a good deal.

Sellers are feeling the pain more than buyers, especially in the slower areas like Blossom Valley where homes just aren't selling as fast as they are listed. For example, two bedroom one bath condos have recently appeared on the scene under 300K in Blossom Valley. I haven't seen these prices in years. However, they still aren't selling even at these reduced prices.

Short sales are becoming more and more common these days throughout Silicon Valley. A short sale is when a seller nets an amount less than the actual pay off demand of the mortgage loan or loans. In other words, they are upside down in their properties and are at the mercy of the banks.

The median price in Santa Clara County for single-family home is currently $805,000 as of August, 2007, dropping about 1% from July, 2007. Condo median prices fell 4.5% to $506,750 in August, 2007 from $530,000 in July, 2007.

There are many Home Buyer Tips all over the Internet. These 5 Tips are things to remember when buying a home.

Tip #1 - Make sure that your cell phone can get a signal from the home that you are previewing. Imagine if you purchased the home and could never use your cell phone because of a weak cell phone signal. Many homes are in drop out zones that no cell phones can work properly. If you rely on your cell phone for business, avoid these homes.

Tip #2 - Don't Use Zillow As Gospel Truth. Zillow gives buyers and sellers estimates. In fact The Wall Street Journal conducted a recent study of 1,000 homes and found that 90% were pretty close, but 10% were off by as much as 25%. What if you saw 10 homes and you bought the 10th one only to find out you paid too much. Make sure that your Real Estate professional does a comparative market analysis (CMA) of the home that you are considering. This CMA will show you what actually sold in the area. Make sure that this analysis is recent and with like homes, bedrooms, etc. Once you see the price per square feet and the conditions of the homes that sold you'll be better prepared to determine a fair market price.

Tip #3 - Commit to a Realtor. I truly feel that when a buyer commits to working with only one Realtor both the buyer and the Realtor can work better together. It is important that you first interview a few Realtors who work in a particular area and ask them important questions. The very obvious question is, "What will you be doing for me as my Realtor?" They should be prepared to explain each step of the buying process and what they will be doing for you at each step. Work with someone that has a good track record and you feel comfortable with. Make sure that they have a license in good standing by going online here.

Tip #4 - Get rid of Car Payments and Credit Card Payments. A recipe for disappointment is making a great salary, having good credit, and not qualifying for a loan. Your car payment and your credit card payments may be holding you back from buying your first home. If this is the case, sell your car and buy an older one with cash. Credit cards are the same way. Pay them off! Keep in mind, that many lenders won't count your monthly payment if your account has less than 10 months or less to pay on it. If you have a payment, the bank takes your monthly payment and deducts it from your monthly income to figure out what they will lend you. If your monthly car and credit card payments total $1,000 per month, do something about it. By eliminating the $1,000 monthly payment, you can qualify for a mortgage loan of $166,792 more at a 6% fixed interest rate based on 30 years. By doing so, you may be able to afford the $620,000 single family home instead of the $550,000 condo with the $300 per month association dues.

Tip #5 - Always Look At Homes Together As A Couple. It seems that with every couple, one person wants to buy a home more than the other. Recognize this and talk about it. However, if you are going to go out on Saturday morning with your Realtor and look at a few homes, make sure that your significant other will also be going along. This is an important part of the buying process. As a Realtor, I look for homes that will please both spouses. Sometimes the husband doesn't care about the home as long as it has a large yard and a two car garage. Hey, the guy has a large family that gets together for barbeques and he also likes to work on cars. Many females care about the kitchen and dining area since they know that this will be the area that the family spends most of their time. Whatever the case, it is important to express the way you feel about each house that you see to your Realtor and each other. Looking at homes together is an important part of the buying process. It makes each person feel important and included in the home buying process.

Effective January 1, 2007 you can now write off PMI on your taxes as a tax deduction for new borrowers only who's Adjusted Gross Income (AGI) does not exceed $100,000 per year.

Private Mortgage Insurance is an special insurance that protects the lender from default and foreclosure. It applies to any loans where a borrower puts less than a 20% down payment on a home. Lenders use PMI to protect themselves from the riskiest loans.

When I bought my first home in 1993, I had to come up with 5% down and had to take out a mortgage for 95% of the home's value. With so little of my money riding on the loan, the bank required that I pay PMI. I paid a monthly PMI payment of approximately 1/2% of the loan amount. This monthly payment was required and I could not write it off in my taxes. The monthly payment went away when my home went up in value. I had to show the bank that I had at least a 20% stake in the home. I proved to the bank that I had built a sufficient amount of equity in my home by hiring a local Realtor® to prepare a Comparative Market Analysis (CMA).

If you have been paying PMI for some time and have built up equity in your home, you might want to contact a Realtor(R) to perform a CMA for you. If the CMA shows that you have more than 20% equity in your home your lender may eliminate PMI altogether. Check with your lender for any restrictions that may apply.

Earlier this month a report was released by Moody's Economy.com that painted a grim picture concerning real estate and home prices in the US. The report specifically named 133 Metro areas in the US that predicted a drop in home prices. The biggest price drop was in Danville, Illinois where home prices had already fallen 18.7 percent from the peak in the second quarter of 2005 to the low-point in the first three months of 2006. Various areas and cities in California were also named in the report but San Jose, CA was only predicted to fall by a small .02 percent. It predicts that San Jose, CA home prices will be lowered from a high point in January, 2007 to a low point in February, 2007 by not even a half of a percent. That's only around a $1,400 drop in price from the current median single family home price of $715,000. I can live with that, can't you?

The difference between Danville, Illinois and San Jose, California hinges on jobs. Basically, Danville, Illinois is suffering through a depressed local economy and has been experiencing job losses on a massive scale. Danville, Illinois home prices have dropped 18.7 percent in large part due to the major job losses in automotive and other manufacturing industries. In San Jose and the surrounding areas, we have job growth and our local economy looks brighter than ever. According to recent report by the Bay Area Council which surveyed 509 CEOs, Thirty-nine percent of CEO's surveyed plan to increase their Bay Area work force in the next six months. Jobs and income go hand in hand in our economy. San Jose has a household income of around $84,857 according to Money magazine where San Jose was selected as one of the best places to live. Our median single family home price in San Jose is currently $715,000 and according to recent data we have a 61 percent owner-occupied rate in San Jose. In a nutshell, San Jose is very different from Danville, Illinois and our local real estate market and local economy is stable because of good jobs, high income and solid home ownership rates.

What does all this mean for buyers who are looking for good deals? If you are looking for a bargain you might want to consider buying in Stockton or Sacramento. According to the same Moody's report, entitled, "Housing At The Tipping Point," it predicts that Sacramento, CA will be hit pretty hard with a 9.9 percent drop in home prices from the peak in April 2005 to low point in February of 2008. Stockton, CA home prices are being predicted to be even worst. Stockton single family home prices are predicted to drop 15.7 percent from the highs in April 2005 to the lows in April of 2008. If however, you want a good investment, buy a home in San Jose, California.

The national economy is still good. Unemployment is low at around 4.8 percent, inflation is at 3.5 percent, GDP is approximately 3.4 percent, and disposable personal income is projected to grow by 3.5 percent for the remainder of 2006. According to a recent report from David Lereah, the National Association of Realtors' Chief Economist, he feels that the slowdown in sales may have already bottomed out and prices could begin rising as soon as early next year. He states in the report, "After a stronger-than-expected drop in July, the fairly even sales numbers in August tell us the market is at a more sustainable pace. It keeps us on track to see the third highest sales year on record, but we do expect an adjustment in home prices to last several months as we work through a build up in the inventory of homes in the market."

There's no better time than now to buy a single family home and take advantage of the current market. Price reductions are very common in today's marketplace which confuses many buyers into thinking that real estate market is tanking. This is not the case in San Jose and in the surrounding areas. Homes that are experiencing price reductions were priced too high to begin with. Homes that are priced well are being sold in a week or two sometimes with multiple offers. Sellers with high prices are getting a "wake up call." If you are a seller, price your home for today's market and not yesterdays. If you are a buyer, there's no better time than the present to buy a home.

Daniel Pizano, Coldwell Banker Los Gatos | www.danielpizano.com | 408.460.8401