First-Time Homebuyer Activity Reaches Three-Decade Low

A combination of factors is keeping many younger Americans out of the real estate market, pushing the level of first-time homebuyer activity to its lowest level in more than 25 years.

The National Association of Realtors’annual Profile of Home Buyers and Sellersfound that first-time buyers accounted for 33 percent of purchases in its most recent survey, down 5 percent from one year earlier. First-time homebuyer activity hasn’t been this low since 1987, when NAR measured it at 30 percent.

Since NAR began conducting the yearly poll in 1981, the average level of first-time buyer activity is 40 percent.

NAR Chief Economist Lawrence Yun attributed the decline to a number of hurdles that younger homebuyers face, including student debt, flat wage growth, and rising rents. Yun also partially blamed a lack of homes for sale on the market – a particular issue here in the Bay Area – along with a handful of other factors.

“Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions, and high mortgage insurance premiums,” Yun said.

And for the first-time buyers across the country who were able to successfully purchase a home, about one-quarter required financial assistance from friends or family members, survey results found. Nearly all younger buyers — 97 percent — financed the purchase, compared with about two-thirds of buyers age 65 and over.

Across the country, the average first-time buyer paid $169,000 for their home, but here in the Bay Area the barrier to entry is much higher. NAR’s most recent monthly housing summary put the median list price for a home in the San Francisco metro area at $949,000 in September, making it the country’s priciest housing market. The San Jose metro area was the third most expensive in the U.S., with a median list price of $718,000.

Younger Bay Area home shoppers also face competition from all-cash buyers and affluent international investors. First-time buyers here must further contend with some of the highest rents in the U.S., which make it more difficult to save money for a down payment.

So what can first-time Bay Area homebuyers do to give themselves a leg up? Two of Pacific Union’s top real estate professionals in Silicon Valley recently gave SFGate a few tips, including getting prequalified for a loan and maintaining a focused attitude.

They also noted that while many first-time buyers initially find homes online, employing the services of a knowledgeable and dedicated real estate professional plays a critical role in a successful transaction.

(Photo: Flickr/Rob Cruickshank)

Baby Boomers Are in No Hurry to Downsize Homes

Real estate pundits have declared that the latest housing trend is the mass movement of baby boomers, who are leaving the large, single-family homes where they raised their families and moving — in droves — into smaller homes and condominiums.
Except that this mass movement hasn’t happened.
“There’s a perception, particularly in many media reports, that this massive generation born between 1946 and 1964 is altering its housing consumption,” said Fannie Mae researcher Patrick Simmons, in a recent interview in the Chicago Tribune.
“It’s true that they’re becoming empty nesters in droves,” Simmons said. “But by one measure, the proportion of boomers who live in single-family homes actually increased between 2006 and 2012.”
He noted that 90 percent of baby boomers in a recent AARP survey said they want to stay in their current home as long as possible.
Simmons is director of strategic planning for Fannie Mae’s economic group, and he said some boomers may be staying put because of the recent housing crisis, when the value of their single-family homes dropped by an average of 13 percent.
Some boomers could still be underwater and are waiting to recoup more on their house before they sell, he said. Others may be holding on to their home because they were able to get a record-low mortgage rate in recent years and they know borrowing won’t be any cheaper if they do decide to sell.
“Eventually, boomers will slow down with age and have the same physical frailties that their predecessors had,” he said. “My sense is that it’s not going to be a major shift, something we see in the numbers in a year. It will likely unfold over a decade or more.”

(Image: Flickr/Gideon)
 

Bay Area Median Home Prices – Mapped

Original Photo sourced from:  http://thefrontsteps.com/2014/08/18/bay-area-median-home-prices-mapped/

Bay Area Home Price Growth Slows but Still Among Nation’s Strongest

Bay Area home prices aren’t rising nearly as fast as they were a year ago, but that’s not to say that they have stagnated. Far from it.

Home prices in the San Francisco metro area in May — the latest monthly data available from the S&P/Case-Shiller Home Price Indices – were 15.4 percent higher than they were a year earlier, and 1.6 percent higher than they were in April, for the second-highest price increases in the U.S. both annually and monthly.

May’s year-over-year rise in Bay Area home prices is down significantly from the 24.5 percent gain recorded one year ago, but most of the nation’s major metro areas posted far weaker numbers. In fact, the composite increase among the 20 largest metro areas was just 9.3 percent annually and 1.1 percent monthly.

The only metro areas with bigger prices increases in May were Las Vegas, up 16.9 percent annually, and Tampa, Fla., up 1.8 percent monthly.

“Home prices rose at their slowest pace since February of last year,” David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices, said in a statement accompanying the latest Case-Shiller results. On average, he said, U.S. metro areas posted price gains “well below expectations.”

Nationwide, price appreciation has slowed recently as real estate markets gradually return to normalcy after the recent recession and housing crisis. In the Bay Area, April and May were the only months where the pace of annual price appreciation dipped below 20 percent in more than a year.

A deeper dive into MLS data for shows that the median price of single-family homes rose, year-over-year, in eight of Pacific Union’s nine Bay Area regions in May.

Napa County saw a 21 percent jump in the median sales price, followed closely by a 20.5 percent rise in our Mid-Peninsula region. The only decrease was in our Sonoma Valley region, where the median price fell 8 percent.








(Image: Flickr/Bhautikjoshi)

Bay Area a Top Destination for Buyers From China — and From France and Russia, Too

It’s no secret that the Bay Area is a popular destination for international homebuyers, particularly those from China, but two new reports from the National Association of Realtors add tantalizing details.

Canadian residents account for the largest share of international U.S. home purchases (19 percent), but buyers from China (No. 2 at 16 percent) hold the lead in dollar volume, purchasing $22 billion in property with an average sales price of $590,826, according to NAR’s2014 Profile of International Home Buying Activity.

Chinese buyers tended to purchase properties in higher-priced markets such as California, Washington, and New York, according to the report, while Canadians bought in lower-priced markets such as Florida and Arizona.

China was also the fastest-growing source of international transactions, accounting for 16 percent of all purchases in the year ended March 31, up 4 percent from the previous year.

San Francisco was the second-most-popular destination for Chinese homebuyers, trailing Los Angeles but ahead of Irvine, Calif.; New York City; and Las Vegas.

In a separate report, NAR said that San Francisco was also a top destination for buyers from France, Russia, New Zealand, and Singapore who conducted property searches on Realtor.com in May.

Favorable exchange rates, affordable home prices, and rising affluence abroad is driving interest among international buyers.

NAR estimates total international sales at $92.2 billion over the past year, up from $68.2 billion in the previous 12 months. Four states accounted for 55 percent of purchases by international buyers: Florida (23 percent), California (14 percent), Texas (12 percent), and Arizona (6 percent).

Pacific Union has been at the forefront of efforts to smooth transactions for Chinese buyers in the Bay Area. Last year, we launched a groundbreaking China Concierge Program to serve that demographic while also giving our Northern California clients access to a new set of buyers. And in May, Pacific Union rolled out aMandarin-language website hosted in China in order to offer homebuyers in the country better access to Bay Area property listings.

Last year, Pacific Union CEO Mark A. McLaughlin was one of just 10 U.S. executives invited to a series of meetings at the U.S. Embassy in Beijing, where he met with some of China’s wealthiest individuals to discuss U.S. real estate investment opportunities.

(Image: Flickr/Reizenbee)