The profile of today’s buyers.

What Do Today’s Home Buyers Look Like?

By Gary Thomas, 2012 President-Elect, National Association of REALTORS®

There was so much helpful and interesting information presented at Annual. Sometimes it can be a little overwhelming! Only now, a few weeks later, am I catching up on all of the excellent information. One item that is particularly valuable and worth taking a closer look at is the results of our recent survey, The 2011 National Association of REALTORS® Profile of Home Buyers and Sellers. It’s a useful picture of the latest trends in real estate.

What stood out to me was that home buyers are:

• Older
• Have higher incomes
• Are more likely to be married

NAR to revised this data four years later, just kidding

Naturally, those who can afford to spend more are generally older and have higher incomes. In fact, the median age for overall home buyers rose from 39 to 43. The number of married couples buying homes rose 6 percent, while purchases by singles and unmarried couples were slightly down.

The market is not going to recover by selling homes to married couples that are 43 years old. You need younger buyers so they can be move up buyers later. This goes to show that even with record low mortgage rates, falling home prices, and government run schemes like FHA it’s still not working. In particular in Southern California.

Most troubling though, is the fact that the market share for first-time home buyers fell to 37 percent in the past year—down from a record high of 50 percent in 2010. Although the high was in part due to a boost in sales from the home buyer tax credit, that’s still a decrease larger than what we’d expect, based on the average. Over the past year, repeat buyers made modestly higher down payments than the previous year, but their incomes were a full 11 percent greater.

I thought the bubble buyer was over, it’s the last of the bubble buyer. Also I posted earlier how parents where co-signing loans or gifting her children downpayment. If you need a home, then buy it, just don’t go nuts.

We can conclude that there are still buyers out there, but qualifying for a loan is harder. This is due to an overly restrictive mortgage credit environment, in spite of plenty of affordable housing.

The survey tells us just how tight the credit market remains

It underscores concerns that the American Dream of home ownership may soon be out of reach for younger Americans. Tighter credit rules, along with legislative proposals to reduce or eliminate the Mortgage Interest Deduction and narrow the definition of the Qualified Residential Mortgage (QRM), threaten the housing industry during a fragile stage of its recovery.

The effect of QRM regulation would be to raise down payments to 20 percent to meet the requirements of a qualified residential mortgage. This would disproportionately affect first-time and minority borrowers.

But the impact of QRM regulation would go far beyond these two groups. Higher rates will slow home sales and lower home prices for all buyers at the very worst time.

Are low home prices so bad? If you like strategic default work it’s natural flow, you have younger buyers purchasing home and becoming the trade up buyers later. The impact of this regulation will that people that qualified to purchase homes will get loans. Not people earning income from flipping equity in their homes. In the long run it will become a much more stable market.

Social Security facing fewer contributing workers in the future, a house remains an important equity investment for young people. Now is not the time to raise new barriers to home ownership.

We will keep then as renters as they are not allow to purchase a home at a discount.

I was heartened to see that most buyers believe in the long-term value of home ownership. Seventy-eight percent of recent home buyers said their home is a good investment, and 45 percent believe it’s better than stocks.

After hearing the stories from members, as well as my own clients, it was so stark to see the impact of such tight lending standard quantified in the numbers. This means that we should keep our heads down, work hard, and know that there are still plenty of buyers looking for the right home.

I have, to add, rental property could be a good investment, please run the number and do you due diligence. However, a home is not an investment it’s your principal residence. That’s why (in a normal market) it was hard to find home that cash flowed as an investment with only 20% down. Usually, the homes that cash flowed where purchased years earlier by the owner that used as a principal residence. I look at my house a consumer item, especially with my AC went out, what is the return on a new AC unit?

This home in Buena Park was recently foreclosed in 2011. The buyer fixed up the home, the usual paint and carpet and then put it back on the market about 21 days. It’s seems a little higher than the competing listing, however it looks cleaner than competing listings. It’s payment is around rent parity.
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Proprietary North OC Housing News home purchase analysis

7934 ASTER Cir

$379,500 …….. Asking Price
$205,000 ………. Purchase Price
8/10/1999 ………. Purchase Date

$174,500 ………. Gross Gain (Loss)
($16,400) ………… Commissions and Costs at 8%
============================================
$158,100 ………. Net Gain (Loss)
============================================
85.1% ………. Gross Percent Change
77.1% ………. Net Percent Change
5.0% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$379,500 …….. Asking Price
$13,283 ………… 3.5% Down FHA Financing
3.92% …………. Mortgage Interest Rate
30 ……………… Number of Years
$366,218 …….. Mortgage
$99,734 ………. Income Requirement

$1,732 ………… Monthly Mortgage Payment
$329 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$95 ………… Homeowners Insurance at 0.3%
$421 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,576 ………. Monthly Cash Outlays

($267) ………. Tax Savings
($535) ………. Equity Hidden in Payment
$18 ………….. Lost Income to Down Payment
$115 ………….. Maintenance and Replacement Reserves
============================================
$1,907 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$5,295 ………… Furnishing and Move In at 1% + $1,500
$5,295 ………… Closing Costs at 1% + $1,500
$3,662 ………… Interest Points
$13,283 ………… Down Payment
============================================
$27,535 ………. Total Cash Costs
$29,200 ………. Emergency Cash Reserves
============================================
$56,735 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..

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Competing Listings

	$399,000 8097 CYCLAMEN Way		0.18 miles 3 bd / 2 ba 1,550 Sq. Ft.
	$349,000 7921 DAHLIA Cir		0.19 miles 4 bd / 1.5 ba 1,179 Sq. Ft.
	$299,000 7616 EL ESCORIAL Way		0.35 miles 3 bd / 1 ba 1,055 Sq. Ft.
	$239,900 7511 EL CERRO Dr		0.46 miles 3 bd / 1 ba 1,044 Sq. Ft.
	$279,000 7671 WESTERN Ave		0.47 miles 3 bd / 1 ba 1,134 Sq. Ft.
	$309,000 8445 PORTULACA Way		0.52 miles 3 bd / 1 ba 1,177 Sq. Ft.
	$250,000 7390 EL PRADO Way		0.55 miles 3 bd / 1 ba 1,011 Sq. Ft.
	$310,000 7704 LILAC Cir		0.65 miles 3 bd / 1.75 ba 1,552 Sq. Ft.
	$309,500 7448 MCNEIL Way		0.66 miles 3 bd / 2 ba 1,291 Sq. Ft.
	$285,000 7293 EL CERRO Dr		0.66 miles 4 bd / 1.75 ba 1,565 Sq. Ft

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