First-Time Home Buyers Double in California

First-time California home buyers doubled in 2009 and nearly half of all buyers bought their homes in a traditional sale, with 88 percent of those purchases carrying fixed-rate mortgages, the California Association of Realtors said in an annual survey released Wednesday.

First-time home buyers jumped to 38 percent in 2009.

Sixty-eight percent of buyers said price decreases motivated them to buy a home, while 39 percent said low interest rates helped them move to a better location, according to CAR.

Twenty-three percent of buyers said the prime motivation was the likelihood rates would move up.

"After back-to-back years of sharp declines, home sales in California rebounded in 2008 and early 2009," said James Liptak, the president of CAR.

"The increase reflected the combination of favorable prices, low mortgage rates, and home buyer tax credits, fueled primarily by sales of distressed properties that accounted for more than half of the state's transactions.

"Housing affordability has improved dramatically in response to the decline in home prices along with historically low mortgage rates, creating a tremendous opportunity for home buyers in California," he said.

Among the survey's key findings:

-- 49 percent of all buyers bought homes in a traditional market sale, while 38 percent purchased a REO/bank-owned property; only 13 percent of buyers purchased through short-sales.

-- Home buyers who purchased a REO or bank-owned property had the hardest time getting a loan, an 8.9 on a scale of 10, compared to a 7.7 for home buyers with a traditional market sale and 7.6 for short-sale buyers.

-- 88 percent of traditional market sales and 75 percent of short sales were financed by fixed-rate mortgages. In contrast, 43 percent of those who bought a REO/bank-owned property used fixed-rate mortgages.

-- Some buyers don't understand the terms of borrowing; of traditional buyers, 32 percent said that they did not know or were not sure about the terms of their loan.

-- On average, home buyers spent 8.4 weeks considering buying a home in 2009, compared with 7.2 weeks in 2008.

-- Twenty-six percent plan to live in their current home for two to three years, 44 percent plan to stay for three to four years, and 30 percent plan to stay for four to five years.

-- First-time home buyers made down payments averaging 19.7 percent of their home sales price, compared with 28.3 percent for repeat buyers.

-- The share of home buyers who had their escrow close on time has steadily dropped from 55 percent in 2006 to 37 percent in 2009.

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