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The California Association of REALTORS® has just released survey results that detail how homebuyers have changed their behavior in recent years. The survey reports that the number of first-time homebuyers has increased for the second straight year, from 38% in 2009 to 46% in 2010. This is a record high since the inception of the survey in 2002. In 2002, only 7% of homebuyers were first-time home purchasers.
A key factor contributing to the large increase is the considerable change in housing affordability. Lower interest rates and lower prices have dramatically improved the affordability of homes in California. The survey also indicates that homebuyers in 2010 are growing in optimism that home prices will appreciate in the near future. The one negative is that buyers are continuing to experience difficulty in obtaining financing. On a scale of 1 to 10 (10 being the most difficult), homebuyers, on average, reported a difficulty level of 8.5. Lenders today are requiring onsite appraisals, larger down payments, higher FICO scores, and debt ratios that are stricter than before the mortgage meltdown occurred in 2007.
As expected, home sales slowed somewhat after the expiration of the tax credit. This slowdown has added needed homes to the inventory. For example, the supply of inventory on the market was 4 months in July 2009, but recently it has increased to 6.2 months.
The added inventory, low interest rates, and improved buyer confidence should create a stronger market in 2011. All in all, 2010 has been a solid year for California Real Estate, and we can expect an even brighter future. |
