(03/15/2010) As economic turmoil forced most California home sales last year, doors
opened to a near record share of first-time home buyers.
According to the California Association of Realtors' (CAR) "2009-2010 Survey of California Home Sellers", 67
percent of all home sellers in California did so in 2009 because they had a
tough time making the mortgage payment.
Unemployment and adjustable rate mortgage (ARM) resets, along with tough
underwriting and equity losses preventing refinanced bailouts, converged on
home owners, forcing them to sell, the report said.
The first-time home buyer share exceeded the state's long-run average of
38.6 percent and was the highest since 1995, when more than half of all
buyers were first-timers.
"It is clear that the federal tax credit for home buyers worked well in 2009 and is continuing to
drive home sales," said CAR President Steve Goddard.
"The home buyer tax credit is arguably the
most successful strategy employed by the government's efforts to stimulate
the economy," Goddard added.
Some qualified Californian home buyers enjoyed both a federal and state home buying tax credit totaling as
much as $18,000. The state version, for new homes only, ran out of cash
months after it was introduced last year.
Home buyers also cashed in on distressed properties. More than half of
all first-time buyers purchased a foreclosure or short sale property.
Distressed properties accounted for almost half of all the state's sales in
2009, an increase from 35.6 percent in 2008.
"2009-2010 Survey of California Home Sellers" also found:
• On average, homes sold for $20,958 less than the original asking
price in 2009. The median difference between the selling and listing price
was $32,315. The list-to-sold-price ratio was $30,000 below list for
first-time sellers, but only $8,000 below list for those who had sold
before.
• Among sellers, 44 percent were first-time sellers, a 33 percent
increase from 2008, and nearly three times the 2007 percentage of 15
percent.
• Sellers in 2009 cited difficulty meeting the monthly mortgage
obligations (30 percent); job loss (18 percent); and a higher mortgage
payment (15 percent) as the primary motivation to sell. In 2008, only 20
percent cited the ability to meet their mortgage payment obligation; while
11 percent sold due to financial difficulties.
• Financial difficulties caused 63 percent of homes to fall out of
escrow prior to closing often because the buyer could not land mortgages,
the buyer backed out, buyer's remorse and home prices declined, among other
reasons.
2009-2010 "State of the California Housing Market" also found:
• One-third of sellers experienced a net cash loss in 2009, the
highest level on record since CAR started tracking the statistic in 1989.
• The median net cash gain from home sales declined 50 percent last
year to $50,000 from $100,000 in 2008.
• Nearly 40 percent of buyers were prompted to buy by the federal tax credit.
• Lower home prices boosted affordability. CAR's First-Time Buyer
Housing Affordability Index rose to a record 64 percent in the third quarter
of 2009.
• Lower-priced distressed properties prompted more than half buyers
to take the plunge. More than 70 percent of properties purchased by
investors were either short sales or foreclosures.
• Low-down payment Federal Housing Administration
(FHA) loans were also a lure. The percentage of home buyers using an
FHA-insured loan increased to 32 percent in 2009, compared with 18.9 percent
in 2008. The median down payment for FHA-insured loans was $9,888 compared
with $92,000 for conventional purchase loans.
• The median price of distressed properties declined nearly one
quarter to $250,000 in 2009 compared with $330,000 in 2008; non-distressed
property prices decreased only 10.4 percent to $485,000 in 2009 compared
with $541,000 in 2008.
• Over all, California's median home price hit bottom in February
2009 at $245,170; for the year 2009, the median was listed at $271,000 and
is projected to increase to only $280,000 in 2010.
• Statewide, annual sales of existing homes are projected to reach
527,500 units in 2010, a 2.7 percent decline compared with 2009's annual
rate of 540,000 units.
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