Improving economy and job growth draw buyers back to housing market, forming more households, REALTOR® survey finds
With an improving economy and job market over the past year, home buyers have started forming households again, and buyers who previously experienced a foreclosure or short sale are back in the housing market, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2015 Survey of California Home Buyers.”
In 2015, more households were formed as the share of buyers who previously lived with their parents increased to 12% – the highest in the survey’s history, up from 2% in 2014. Additionally, the share of those who previously rented dipped from 40% in 2014 to 39% in 2015, and those who previously owned fell from 59% in 2014 to 47% in 2015.
With distressed sales at record lows, California is returning to a more normal housing market, with those who previously went through a foreclosure or short sale returning to the market and purchasing homes again. More than one in five home buyers (22%) experienced a distressed sale, most of which occurred after 2007. A further indication of this return to normalcy is reflected in the share of buyers who were previously “underwater” on their homes, which increased to 23% in 2015, up from 4% in 2014.
Additional findings from C.A.R.’s “2015 Survey of California Home Buyers” include:
• In what could further exacerbate a future housing inventory shortage, buyers in 2015 indicated they plan to keep their home longer than ever – an average of 20 years – substantially longer than the six years cited by home buyers in 2013.
• Buyers cited “tired of renting” (15%), “wanted a place to live” (14%), “desired larger home” (12%), “changed jobs/relocated” (11%), and “desired better/other location” (8%) as the top reasons for purchasing a home. In looking specifically at first-time buyers, “tired of renting” was the top reason for purchasing a home (21%), followed by “wanted a place to live” (19%).
• Despite the recent run up in home prices, the vast majority (85%) felt that their home was worth the price they paid, while 14% said the price was too high, and 1% said the price was too low.
• The primary source of down payment for first-time buyers was personal savings, cited by 49% of first-time buyers, followed by “borrowed or gift,” cited by 33% of first-time buyers. The primary sources of down payment for repeat buyers were personal savings (34%) and proceeds from sale of previous residence (34%).
• Buyers spent an average of 18 weeks considering buying a home before contacting a real estate agent in 2015, down from an average of 19 weeks in 2014 and a high of an average of 24 weeks in 2013. They spent an average of 14 weeks investigating homes and neighborhoods before contacting an agent in 2015, down from an average of 21 weeks in 2014 and a high of an average 29 weeks in 2013.
• In 2015, it took home buyers an average of 12 weeks to look for a home, the longest since C.A.R. began the survey. It took an average of 10 weeks in 2014 and 2013 for home buyers to find a home. In a sign of less market competition, buyers made fewer offers in 2015 compared to previous years – an average of 2.6 offers, down from an average of 3.6 offers in 2014, and an average of 3 offers in 2013.
• While the majority of buyers (75%) were satisfied with their home purchase, one-fourth made compromises, with 13% saying they selected the best house given the limited supply in their desired neighborhood, and 12% who said they selected the best house in an affordable neighborhood because prices were too high in their preferred neighborhood.
• Buyers put an average of 24% down on their home purchase in 2015, down from 28% in 2014, and 25% in 2013, but more than what has been the traditional 20% since 2009.