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REALTOR®: It's a New Housing Market Environment for Buyers, Sellers

Thursday, October 15, 2009

California's housing market appears to be bouncing back with increased sales due in large part to the growth in the absorption of distressed properties, which have comprised over half of the sales. With deeply discounted distressed sales flooding the market, prices have dropped significantly since early 2008. Despite their negative impact on home owners' equity, the decline in home prices, combined with historically low mortgage rates, have dramatically improved housing affordability and have created opportunities for home buyers.

At the California Association of REALTORS® EXPO held in San Jose last week, C.A.R. Vice President and Chief Economist shared some findings from the C.A.R. 2009 Survey of California Home Buyers. The survey details how home buyers have changed their behaviors in recent years to adapt to the new housing market environment. Appleton-Young said clearly evident is "buyers seeing opportunities," while "many sellers are undergoing financial distress."

Some of the key findings include:
• Distressed sales made up more than half of sales in California. According to results from the survey, 49 percent of all buyers bought a home through a regular market sale, 38 percent bought an REO/bank-owned property, and 13 percent bought a short-sale property.
• Home buyers, in general, were optimistic about the future direction of home prices in their neighborhood. While fewer than one in ten believed prices would go up over the next year, one-third believed prices would go up in the next 5 years, and 60 percent thought prices would go up in 10 years.
• 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 a high average level of difficulty in obtaining finance of 8.1.
• A recent study by C.A.R. suggests that the financial benefits of owning a home outweigh that of renting for first-time buyers. For a first-time buyer household that purchases an entry-level home between Jan. 1 and Nov. 30, 2009, the overall tax liability savings in the first five years of homeownership is well over $11,000 when compared to renters.
• When asked why they were satisfied with their agent, home buyers continued to cite "always quick to respond" (73 percent) and "negotiated good deal on their behalf" (61 percent) as the top two reasons.
• Home buyers needed the most help with price negotiation (36 percent), determining prices for comparable homes (24 percent), finding the right home to purchase (21 percent), negotiating the purchase of distressed property with banks (18 percent), and negotiating the terms of sale (2 percent). 

Appleton-Young stressed home buyers still need more education with regard to financial literacy, noting 21 percent of buyers stated they did not know or understand the terms of their loan.

"This is clearly unacceptable," she stated, and urged REALTORS® to be more pro-active in educating their clients on opportunities in the market and responsible homeownership.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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