California home buyers are more optimistic about the housing market than they were three years ago, according to a new study from the California Association of Realtors.
More home buyers think prices will rise over the coming decade. Some 25 percent of those surveyed said they think prices will rise in one year. Another 41 percent think they’ll rise within the next five years and 73 percent think prices will mount in 10 years. When the question was posed in 2009, the percentages were 8 percent, 35 percent and 60 percent.
And when it comes to the ultimate decision of whether to buy a home, a key aspect of the decision comes down to mortgage interest deduction. Some 79 percent of the survey-takers say it is “extremely important.” That finding was consistent across all income levels and age groups.
“It’s clear that home buyers at all income levels and ages value the tax deductions associated with purchasing a home,” said C.A.R. President Don Faught. “The mortgage interest deduction plays an important role in buyers’ monthly budgeting. Without this tax advantage, housing affordability would be negatively impacted and potentially price out many would-be buyers.”
Other findings include:
- After mortgage interest deductions, the top factors in deciding to buy include price decreases, the desire for a better location and favorable prices and financing options.
- None of the buyers think prices will drop in the future.
- In terms of securing financing, buyers are finding it difficult. Given a scale of 1 to 10 with 10 being extremely difficult, the average buyer said getting financing ranks an 8.5.
- Buyers are coming up with heftier down payments at an average of 25 percent down.
- Some 93 percent obtained a fixed-rate loan. In 2011, 84 percent received a fixed-rate loan. This, CAR says, signals buyers’ need for certainty.
Meanwhile, national builders’ confidence is also increasing, according to the National Association of Home Builders.
“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” observed NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.”