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Four Out of 10 Recent Buyers Relied on FHA Loans, says National REALTOR® Group

Tuesday, February 9, 2010
According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.

"FHA helps provide affordable mortgage financing to homeowners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market," said National Association of REALTORS® President Vicki Cox Golder. "These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric."

In addition, REALTORS® expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available.

The RCI results indicated distressed sales increased to 33 percent of all home sales last month, and both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers' perceptions of other homes for sale. REALTORS® report that many buyers have pricing expectations that treat every property as if it were in foreclosure.

At a recent Silicon Valley Association of REALTORS® meeting, real estate consultant Carole Rodoni told REALTORS® to remind buyers that "just because a property is for sale doesn't mean it's a red tag sale."

"Interest rates are the lowest they've been in 58 years," Rodoni said. "Tell your buyers they are getting free money right now and they would be crazy not to take advantage of this opportunity."

Rodoni acknowledged tight competition between first-time buyers and big investors for these distressed homes is currently taking place. She also indicated "location matters a lot in this market" and home prices will vary within cities and even within a neighborhood, depending on the school district, inventory in that area, days on market, as well as the type of home.

"As the first, best source for real estate information, REALTORS® have their finger on the pulse of current housing trends, and their knowledge and experience offer valuable insights into today's real estate market," said Golder. "We know that an economic recovery is not possible without a housing recovery, and we will continue to work with policymakers at all levels to ensure that this happens."

The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 REALTORS®. In a typical month there are more than 3,000 usable responses. Participants are asked about their expectations for the demand for homes, price of homes, and other economic conditions.

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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