December 11, 2012
Home buyers’ optimism contributes to recovering housing market, C.A.R. survey finds
LOS ANGELES (Dec. 11) – In a sign of an improving housing market, California home buyers are more optimistic about the housing market now than they were three years ago, according to the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) “2012 Survey of California Home Buyers.”
More home buyers this year believe that home prices will rise, with 25 percent saying prices will rise in one year; 41 percent saying they will rise in five years; and nearly three-fourths of buyers (73 percent) believing home prices will rise in 10 years. This compares to only eight percent, 35 percent, and 60 percent, respectively, in 2009, when the question was first asked.
The survey also found that the mortgage interest deduction is extremely important to home buyers across all income levels and age groups, with 79 percent of all home buyers saying that the mortgage interest and property tax deductions are “extremely important” in their decision to purchase a home. When broken out by income levels, the findings were similar across all income levels, with 80 percent of those earning less than $100,000 annually; 78 percent earning between $100,000-$199,999, and 81 percent earning more than $200,000 annually saying the deductions were “extremely important” in their buying decision, respectively.
When broken out by age group, the deductions were equally important to Generation Y, Generation X, and baby boomers, with 76 percent, 82 percent, and 80 percent indicating that mortgage interest and property tax deductions were “extremely important,” respectively, when deciding to buy a home.
“It’s clear that home buyers at all income levels and ages value the tax deductions associated with purchasing a home,” said C.A.R. President Don Faught. “The mortgage interest deduction plays an important role in buyers’ monthly budgeting. Without this tax advantage, housing affordability would be negatively impacted and potentially price out many would-be buyers.”
Additional findings from C.A.R.’s “2012 Survey of California Home Buyers” include:
• Buyers also cited price decreases (45 percent), the desire for a better location (12 percent), and favorable prices/financing (11 percent) as reasons for purchasing a home.
• None of the buyers felt that prices would drop in the future, which echoes a jump in the consumer confidence index from 37.38 in January 2009 to 73.7 in November 2012.
• In a sign of tighter lending standards common today, buyers experienced extreme challenges in obtaining financing. On a scale of one to 10, with 10 being extremely difficult, buyers rated their difficulty in obtaining financing at 8.5 on average, up from 8.0 in 2011.
• Higher down payments are the norm for the market these days, with buyers putting an average of 25 percent down on their home purchase. The average down payment has been higher than the traditional 20 percent since 2009, when the question was first asked.
• Ninety-three percent of buyers obtained a fixed-rate loan, up from 84 percent in 2011, reflecting buyers’ need for certainty as the market gets back to basics.
Survey of California Home Buyers Charts:
• Importance of tax deductions to all buyers.
• Importance of tax deductions by income.
• Importance of tax deductions to age group.
• Buyers’ optimism about home prices.
• Buyers’ financing difficulties.
The 2012 C.A.R. Home buyer survey was conducted by telephone to 800 people statewide to measure their perceptions of the home buying process. Eligible respondents all closed escrow on their new homes within the six months prior to August 2012. For the full report on the survey findings, please contact firstname.lastname@example.org.
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.