The Survey of California Home Buyers is the 11th annual CALIFORNIA ASSOCIATION of REALTORS® (C.A.R.) buyer survey that details how home buyers have changed their behaviors in recent years to adapt to the new housing market environment and to the increased use of the Internet in the real estate business.
Key Findings
• First-time buyers took advantage of the improvement in housing affordability over the past two years, as evidenced by the increase in their share of all home buyers. The share of first-time buyers increased for the second consecutive year from 38 percent in 2009 to 46 percent in 2010. It was the record high since the inception of the survey in 2002 when only 7 percent of home buyers were first-timers.
• The federal home buyer tax credit was an influencing factor in the buyer's decision to purchase. The influence was especially pronounced for first-time buyers with three quarters of them admitted that the tax credit had an impact on their decision to buy their home.
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• Despite its influence on first-time buyer's decision to purchase a home, the federal tax credit was not the primary reason to buy for most. For those who considered the tax credit as their primary reason to purchase their home, it is very possible that they were lacking a down payment for their home purchase, and hoping that the tax credit will be enough to cover it.
• With distressed properties generally sold at a bigger discount than regular market sales, the share of home buyers who were interested in purchasing REO/Bank-owned properties and short-sale homes increased from 2009. Home buyers who bought an REO/Bank-Owned property increased slightly from 38 percent in 2009 to 41 percent in 2010, while those who purchased a short-sale home increased from 13 percent to 16 percent. The increase in the interest in REO and short sale properties was fueled primarily by first-time buyers.
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• Home buyers were more optimistic about future home prices than buyers in 2009. Nearly a quarter (23 percent) of them believed that home prices in their neighborhood will go up in one year, as compared to 8 percent in 2009.
• Despite an increase in the share of first-time buyers, home buyers in general were putting a larger percent of down payment for their home purchase when compared to 2009. On average, first-time buyers put an average of 23.1 percent as their down payment in 2010, while repeat buyers put an average of 37.3 percent. The percentages of down payment for both groups were higher when compared to those in 2009.
• Home buyers continued to experience considerable difficulty in obtaining financing for the homes they bought. On a scale of "1" to "10", with "1" being "very easy" to obtain financing and "10" being "very difficult", home buyers reported an average level of difficulty of 8.5, compared to 8.1 in 2009.
• When asked why they were satisfied with their agent, home buyers continued to cite "always quick to respond" (74 percent) and "negotiated good deal on their behalf" (69 percent) as the top two reasons for satisfaction. "Not negotiating aggressively" has been the most cited reason for buyers' dissatisfaction with their agent in the last two years. With home prices falling sharply from the peak years and distressed properties galore in the market, many home buyers had very high expectations on their agent in the negotiation process.
• Overall, the majority of home buyers were pleased with their agent, and 72 percent of them would use the same agent again in the future, an increase from 64 percent in 2009. The increase was the second year in a row, and the percent of home buyers who would use their agent again was the highest since 2007. Seventy-five percent of first-time buyers and 70 percent of repeat buyers said they would use the same agent again.
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