Favorable home prices, record-low interest rates, and the belief that rates will rise in the near future were the primary motivators leading homebuyers to purchase in 2009 compared with last year, according the California Association of Realtors (CAR) “2009 Survey of California Home Buyers,” released last 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 homebuyer 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 homebuyers in California.”
Forty-nine percent of all buyers purchased a home through a traditional market sale, while 38 percent purchased a REO/bank-owned 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. Homebuyera 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 homebuyers with a traditional market sale and 7.6 for short-sale home buyers.