Q: We’re trying to buy a single-family house, but our loan officer said our debt-to-income ratio was too high. So they suggested we buy a condo. However, we have three generations in our household, so what we really need is a house. My father-in-law, who is very active, lives with us. On top of that, our eldest child moved back home after college. We’re looking for our living arrangements to be more relaxed with extra square footage or additional bedrooms.

Should we wait for Bay Area home prices to drop further? Or, as our current loan officer suggested, should we pay off our car loan and credit card debt ($13,000) to buy a house?

A: To be honest, you don’t just have two options. You actually have many more you can explore. For example, another loan officer might suggest using that $13,000 to buy down your interest rate, permanently or temporarily. The result is a lowering of your loan payment and debt-to-income ratio. In addition, a seasoned real estate agent may consider purchasing a duplex, triplex or quadplex, aka fourplex. The extra unit(s) can house your father-in-law, adult child or tenants.

Residential real estate agents and their loan officers work with the term of art: one- to four-family properties. Its meaning is seldom explained and rarely explored. In short, the preferred lending for an owner-occupant of a condo, townhouse or single-family house is the same as a duplex, triplex or quadplex. In other words, you can still use a lower down payment and enjoy a lower interest rate as an owner-occupant of a two- to four-family property.

At the beginning of 2023, waiting for Bay Area single-family home prices to drop further might be imprudent. To illustrate, the moniker of Silicon Valley, aka Santa Clara Valley, includes Santa Clara County, San Mateo County and Alameda County. For example, after home prices fell for most of the year, according to the California Association of Realtors (C.A.R.), December 2022 statistics for pre-owned single-family home sales show stability and resiliency:

Year-Over-Year December Price Change:

• Alameda County -11.02%

• Santa Clara County -15.1%

• San Mateo County -13.9%

Sales Price to List Price Ratio:

• Alameda County 100.0%

• Santa Clara County 98.2%

• San Mateo County 98.3%

Median Days on Market:

• Alameda County: 19

• Santa Clara County: 18

• San Mateo County: 23

Year-Over-Year December Active Listings:

• Alameda County +97.7%

• Santa Clara County +89.7%

• San Mateo County +62.0%

Combined, these counties around the southern San Francisco Bay, consisting of Silicon Valley, show an eye-opening supply and demand equation in 2022. According to the Realtors multiple listing service, based on approximately 24,000 listings from the three counties, all but one month had less than one month of inventory. In addition, July 2022 showed 1.1 months of unsold pre-owned single-family homes for sale. Real estate economists like to remind us of the adage that six months of housing inventory is a balanced market.

Despite atmospheric rivers in Santa Clara County, many listing agents reported 30 to 50 groups at what usually would be rained-out open houses. Now is the time to explore wintertime purchasing options with your one- to four-family properties, preferably with a new loan officer and their favorite real estate agent. In summary, consult with other real estate professionals for new options this winter to avoid being up a creek without a paddle.

Questions, concerns or inquiries? Realtor Pat Kapowich is a Certified Real Estate Brokerage Manager and career-long consumer protection advocate. His hometown of Sunnyvale, California, is where he is based. Office Landline: 408-245-7700, Pat@SiliconValleyBroker.com Broker# 00979413 www.SiliconValleyBroker.com