Monday, March 15, 2010

Housing report finds many new buyers entering the market, even in Solano

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Affordable home prices, tax credits for home buyers, historically low interest rates, and a large number of distressed properties prompted many first-time home buyers to enter the market in 2009, according to the California Association of Realtors' 2009-2010 "State of the California Housing Market" report released last week. The percent of first-time buyers increased dramatically in 2009, from 35.9 percent in 2008 to 47 percent in 2009, according to the report. The share of first-time buyers exceeded the long-run average of 38.6 percent and was the highest since 1995, when more than half of all buyers were first timers. "It is clear that the federal tax credit for home buyers worked well in 2009 and is continuing to drive home sales," said C.A.R. President Steve Goddard…. nearly 40 percent said they would not have purchased a home if the federal tax credit was not offered. On the same note, nearly 70 percent of those buyers said the tax credit was either "very important" or "most important" in their decision to buy a home. The large number of distressed properties led to more than half of all first-time buyers purchasing an REO/foreclosure or short sale property. Statewide, real estate owned/foreclosures and short sales accounted for almost half of all annual sales in 2009, an increase from 35.6 percent in 2008. The median price of distressed properties declined nearly one quarter to $250,000 in 2009 compared with $330,000 in 2008. Meanwhile, the statewide median price of non-distressed properties decreased only 10.4 percent to $485,000 compared with $541,000 in 2008. The story is much the same in Solano County…. "The dominant part of our business right now in Vacaville, Fairfield and Suisun has been those first-time buyers," Porter said…. the biggest challenge is a shortage of inventory on the market…. Many sellers sold their homes with a loss in 2009, and those who experienced a net cash loss increased for the fifth consecutive year. With one-third of sellers experiencing a net cash loss in 2009, it was the highest level on record since C.A.R. started tracking net cash losses in 1989, and was more than triple the long-run average of 9.3 percent. Following two consecutive years of significant declines in prices, the median net cash from home sales declined 50 percent last year to $50,000 from $100,000 in 2008….