Favorable home prices, record-low interest

 1st-time home buyers now 38% of market   

 

rates, and the belief that rates will rise in

the near future were the primary motivators

leading home buyers to purchase in 2009

compared with last year, according to the

California Association of Realtors’ “2009

Survey of California Home Buyers,” released

this week.

Sixty-eight percent of buyers said price decreases

motivated them to buy a home, while

39 percent reported low interest rates helped

them move to a better location. Twenty-three

percent claimed the likelihood that rates will

move up as the motivating factor.

“After back-to-back years of sharp declines,

home sales in California rebounded

in 2008 and early 2009,” said CAR President

James Liptak. “The increase reflected

the combination of favorable prices, low

mortgage rates, and home buyer tax credits,

fueled primarily by sales of distressed properties

that accounted for more than half of

the state’s transactions.

“Housing affordability has improved dramatically

in response to the decline in home

prices along with historically low mortgage

rates, creating a tremendous opportunity for

home buyers in California,” he added.

Forty-nine percent of all buyers purchased

a home through a traditional market sale,

while 38 percent purchased a REO/bankowned

property, according to the survey.

Reflecting the difficulty in closing short

sales—properties selling for less than the

loan amount—only 13 percent of buyers

purchased a short-sale property.

Home buyers who purchased a REO or

bank-owned property experienced the highest

level of difficulty in obtaining financing,

compared with a more traditional transaction.

They rated the level of difficulty as 8.9

(on a scale of 1 to 10 with 10 representing

the greatest level of difficulty in obtaining

financing) compared with a 7.7 for home

buyers with a traditional market sale and 7.6

for short-sale home buyers.

Eighty-eight percent of traditional market

sales and 75 percent of short sales were

financed through fixed-rate mortgages. By

contrast, just 43 percent of those who bought

a REO/bank-owned property used fixed-rate

mortgages.

Financial literacy with respect to mortgage

financing appears to have been a challengefor some buyers. For those buyers in a traditional

market sale, 32 percent said that they

either did not know or were not sure they

knew the terms of their loan. The numbers

were more encouraging for buyers of REO

and short-sale properties, where only 12 percent

and 7 percent respectively admitted they

were unsure as to the terms of their loan.

According to the survey, the large number

of distressed properties on the market provided

more choices for home buyers in 2009

than in recent years.

“In contrast to peak years when inventory

levels were at record lows, inventory

levels over the past several months have

been in the range of the long-run average,”

said CAR Chief Economist Leslie Appleton-

Young. “With many homes available on the

market at more affordable prices in the past

year, home buyers have been devoting more

time to considering and carefully selecting

their home during the researching and buying

process.”

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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