Low Prices, Rates Spur California Home Sales
After a two-year downturn, California home sales have increased 27% through the end of 2008 and beginning of 2009, spurred by low home prices, mortgage rates and a belief that rates will increase in the near future, according to a survey by the California Association of Realtors (CAR). Lower home prices encouraged 68% of the survey’s respondents, while 39% said low interest rates put them in the market for a new home. An additional 23% named the belief that mortgage rates will increase in the near future as a motivating factor in their decision to buy a home. Distressed sales made up more than half of California’s home sales. The 38% percent of homebuyers that purchased real-estate-owned (REO) properties reported they had the most difficulty securing financing, on averaging rating their experience an 8.9 on a scale of 10. While short-sale properties only accounted for 13% of California sales, buyers rated their financing experience the easiest, a 7.6 on average. The 49% of home buyers involved in a traditional transaction rated their financing experience a 7.7 on average. The glut of bank-owned properties on the market has kept California’s housing inventory stocked, giving buyers many options. “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,” CAR chief economist Leslie Appleton-Young said in a release. “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.” The average home buyer spent 8.4 weeks considering their purchase in 2009, up from 7.2 weeks in 2008. Buyers spent 10.3 weeks searching for a home with their real estate agent, compared to 8.7 weeks in 2008. Nearly one-third of respondents who purchased in a traditional market sale said they either did not know or were not sure they knew the terms of their loan. A smaller percentage, 12%, of REO buyers and 7% of short-sale buyers indicated the same response. Write to Austin Kilgore.