March is a Busy Month for Buyers and Sellers. Are You Ready?

Are you ready for the springtime real estate rush?

March is one of the busiest months of the year for Northern California homebuyers and sellers, as winter recedes and families start making plans for the future. Whether you’re looking for a new home or preparing to put yours on the market, it’s important that you’re ready for busy times ahead.

BUYERS: IS YOUR PAPERWORK IN ORDER?

Homebuyers in Pacific Union’s Bay Area and Lake Tahoe/Truckee regions aren’t likely to face the frenzied competition that marked our real estate markets in recent years, but multiple offers are still routine for attractive properties.

In order to give your bid a fighting chance, you must have your paperwork ready and financing in place. Most importantly, determine how much of a down payment you can afford and how much you can spend on monthly mortgage payments.

Make notes about the features that are important to you in a new home, and do  homework on the neighborhoods that most interest you. Your real estate professional has a wealth of knowledge about local communities, including schools and nearby amenities, as well as the inside story on local homes on the market.

SELLERS: FIX IT AND CLEAN IT

A thorough spring cleaning takes on added significance when you’re preparing your home for sale. You want the house and surrounding property to shine like never before in order to quickly attract the best possible offer.

Washing windows and walls isn’t enough. Replace missing light bulbs and worn fixtures, paint dingy surfaces, and replace worn carpeting. (Some real estate professionals say painting and new carpeting are the cheapest improvements with the biggest payback.)

Get rid of clutter in your home. Prospective buyers love to open cabinets and closets, and sparsely filled storage spaces look bigger than those that are packed full. Consider renting a storage unit for items that aren’t essential to your daily life.

Some sellers keep family photos on the walls and personal mementos and heirlooms on display, thinking they help make a house look homey. But real estate professionals will tell you they’re a turn-off for buyers, who want to imagine their own belongings in place — not yours. Take them down.

Outside, the same rules of fixing and cleaning apply. Prune trees and bushes, rake the yard, and add mulch to flower beds. Perhaps the home’s exterior doesn’t need a new coat of paint, but a few hours with a power washer could make a world of a difference.

Lastly, but perhaps most importantly, sellers should determine how much money they need to get out of their home and set the sales price accordingly. Pricing is a delicate matter, though, and includes outside forces such as neighborhood dynamics and the local economy. Your real estate professional can tell you more about such matters, including pricing data for comparable homes nearby.

Spring is always an exciting season. Good luck with your real estate adventure!

(Image: Flickr/Scott Maxwell)

Article and photo sourced from:  http://blog.pacunion.com/march-is-a-busy-month-for-buyers-and-sellers-are-you-ready/

Plan Ahead to Make Your New-Year Real Estate Resolutions a Reality

New-year resolutions are a dicey thing. It’s fine to swear to losing 20 pounds over the next few months, but unless you make a point to work out regularly or cut back on calories, it’s not going to happen.

The same is true in real estate. Homebuyers and sellers in the Bay Area can resolve to close a deal in 2015 — taking advantage of near-record-low mortgage rates, stabilizing home prices, and favorable economic conditions — but they need to be ready when the perfect opportunity comes along or they will lose out.
Follow these sensible steps to help make your 2015 real estate resolution a reality.

BUYERS: PREPARE YOUR FINANCES AND DO YOUR RESEARCH

Pay off credit cards and other debt so that you meet your mortgage lender’s qualifications. Anything you can do to improve your credit history and raise your credit score will help you get a better interest rate on your home loan.

This may seem contradictory, but at the same time as you pay off debt, do what you can to save money for a down payment. If a family member can help, go beyond a verbal commitment and get an agreement in writing (or cash).

With debt under control and a down payment in the works, take an honest look at your finances and determine how much you can afford to spend. No matter how wonderful your dream home may be, you’re not going to enjoy it if you can’t afford it.

Educate yourself on neighborhoods where you would like to live. What are homes in those areas selling for? What parks, shopping districts, and other amenities are nearby? If you have children, make sure to learn all you can about local public and private schools.

Talk with a real estate professional who is familiar with the areas in which you are searching. Get familiar with the ins and outs of buying a home, including paperwork, estimated timelines, making a bid, and closing a sale.

Start making your moving plans far in advance. Familiarize yourself with moving and storage options, and get rid of household clutter to save trouble later.

THREE WORDS FOR SELLERS: FIX, CLEAN, STAGE

Complete any unfinished home-improvement projects, and consider a few new ones that will add value to the property. Schedule an inspection to help get your house ready for sale and ensure there will be no surprises.

Clean your home, inside and out. Shampoo the carpet, wipe down the walls, and don’t forget to wash the windows. Sparkling windows are a sign of a well-cared-for home.

Talk with a real estate professional who is familiar with your community. Find out what your home is worth and what strategies will help it sell quickly. Learn the basics of home staging, and if necessary, hire a professional stager.

Lastly, remember to plan your exit strategy. Are you buying your next home at the same time you’re selling your current one? Familiarize yourself with moving and storage options.

(Image: Flickr/e3Learning)

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)

Think Your House Is Small? Try a Microapartment.

One of the most common reasons apartment dwellers give for purchasing a single-family home is the desire for more space. Another bedroom, perhaps, or a private office or den. And a family room with enough space to accommodate a “Guitar Hero” showdown.

So imagine the pent-up desires of people who live in microapartments — living spaces so small they redefine the concept of cozy.

In Seattle, some residents are living in apartments as small as 90 square feet. That’s the size of a guest bathroom in many Bay Area homes.

An article on the Gizmodo website notes that a quirk in the Seattle housing code allows developers to count kitchens, not bedrooms, when defining housing units, so several microapartments share kitchen space to meet the letter of the law. Accordingly, one Seattle development has 64 living spaces in a building that would typically hold eight units. 

San Francisco‘s housing code provides just a bit more space, allowing apartments as small as 220 square feet — the size of a master bathroom in many Bay Area homes.

But these microscopic apartments can still command eye-popping price tags per square foot. In San Francisco, the smallest condominium for sale in the third quarter of this year was just 311 square feet, according to MLS data. It eventually sold for $381,000 — slightly more than original price — for a price per square foot of $1,225.

San Francisco and Washington, D.C., tied for four fourth place for the smallest allowable apartments in major U.S. cities. Placing second and third after Seattle’s 90 square feet are Portland, Ore., (150) and Los Angeles (200).

Rounding out the list are Providence, R.I. (225); Chicago (275); Boston (350); and Austin, Texas, and New York City (400).

Gizmodo notes that the United States is hardly the leader in microhousing. “Japan, Hong Kong, and much of Europe have been doing tiny apartments better than us for years,” the article says. “But culturally we’re moving in that direction: 28 percent of all American households were made up of single people in the 2010 census, a number that’s been growing since the 1970s.”

(Image: Flickr/ClatieK)

Real Estate Roundup: Bay Area One of Top Markets for Absentee Homebuyers

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:

A home in San Jose, one of the fastest-growing real estate markets for absentee buyers.

INVESTORS DRIVE UP ABSENTEE-BUYER ACTIVITY IN SAN JOSE, SAN FRANCISCO
Steadily rising home prices across the Bay Area have attracted both institutional and individual investors to our local real estate markets, leading to some of the largest increases in purchases by absentee homebuyers in the country.

According to a study by Builder citing CoreLogic data, purchases by absentee buyers rose 1.96 percent in the San Jose metro area from 2013 through the third quarter of this year, the third largest gains in the U.S. In the San Francisco metro area, which includes Oakland, absentee-buyer activity rose 1.72 percent during that same time period, No. 4 in the nation.

Despite the increase in the number of absentee buyers, the California Association of Realtors (CAR) recently released a forecastprojecting that the number of investors in the state will decline in 2015.

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SEPTEMBER DISTRESSED SALES NONEXISTENT IN NAPA COUNTY
Recent CAR statistics show that the median home sales price in Napa County rose nearly 33 percent on an annual basis in September, the largest increase in California. Last week, the organization released another report that spells more good news for the Napa housing market: distressed sales virtually disappeared in September.

CAR’s latest pending and distressed sales report says that Napa County boasted a 0 percent distressed-sales rate for single-family homes in September, the lowest in California. Distressed sales in Napa declined from 5 percent in August and 12 percent from one year ago.

Almost all Bay Area counties for which CAR published data had lower rates of distressed sales than the statewide average of 9 percent, with the exception Solano County.

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MAPPING SAN FRANCISCO’S 40 MOST IMPORTANT CONSTRUCTION PROJECTS
Construction cranes have been a constant sight in San Francisco over the past few years, working to help bring relief to the city’s housing crunch.

Curbed SF has compiled a list and map of the 40 most notable commercial and residential real estate construction projects in the city. Many of the projects profiled are clustered in the city’s densely packed northeastern corner, though projects in Mission Bay and central San Francisco also made the list.

The residential housing developments on the list range from buildings that will combine offices, stores, and condominiums to those that are strictly residential. Curbed SF’s list puts the combined number of housing units the 40 developments will bring to market at more than 4,500, though it does not disclose numbers for all projects included.

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U.S. FORECLOSURE ACTIVITY LEVELS LOWEST SINCE 2011
The number of short and distressed sales declined across the country in the third quarter on both a quarterly and annual basis, bringing activity to its lowest level in two-and-a-half years.

According to a recent RealtyTrac report, distressed and short sales accounted for 12.7 percent of all transactions in the third quarter, down from 14.2 percent in the second quarter and from 14.5 percent in the third quarter of 2013.

Although there are fewer distressed homes on the market, homebuyers willing to take a chance on a fixer-upper can still expect to receive a significant discount, RealtyTrac Vice President Daren Blomquist said.

“Even as the share of distressed sales decreases, the average discount on distressed properties continues to be substantial because the primary factors driving that discount are still in place,” Blomquist said. “Distressed properties are typically in poor condition and have a highly motivated seller, whether that seller is the distressed home owner in foreclosure or the bank that has repossessed the property through foreclosure.”

(Photo: Flickr/David Sawyer)

Real Estate Roundup: San Francisco Least Affordable U.S. City for Millennial Homebuyers

MILLENNIAL HOMEBUYERS SHUT OUT OF SAN FRANCISCO
Although millennials are flocking to San Francisco to take advantage of the city’s tech economy, they’re finding it difficult to purchase a home once they get here.
A new study by RealtyTrac says San Francisco is the least affordable county in the U.S. for millennials hoping to purchase a home. According to the firm’s data, San Francisco saw a 68 percent population increase in millennials between 2007 and 2013. As of April, the average millennial buyer would need to devote 78 percent of his or her median income to afford the median home price of $950,000.
Although homes across the Bay Bridge were considerably more affordable for millennials, Alameda still ranked as the eighth least-affordable U.S. county. Millennials could expect to spend about 45 percent of their income to afford Alameda County’s median price of nearly $520,000.

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Homes in San Francisco’s Inner Mission
neighborhood, now a hotbed of millennials.

BAY AREA $1 MILLION HOME SALES REACH ALL-TIME HIGH
Sales volumes for $1 million-plus homes have reached their record highs in the Bay Area, according to an article in the San Jose Mercury News.
Citing statistics from DataQuick, the publication says that 5,734 homes sold for more than $1 million in the nine-county Bay Area in the second quarter, surpassing the previous peak of 5,699, set in 2005.
Hillsborough had the most expensive Bay Area home sale in the second quarter, at $12.9 million. The article notes that Silicon Valley’s economic boom has created so much wealth and pushed home prices so high that there are currently no single-family homes on the market in Menlo Park west of Highway 101 priced less than $1 million.
Pacific Union CEO Mark A. McLaughlin gave the Mercury News his take on rising prices in the Bay Area, pointing to the region’s economy, population growth, and desirability as three key drivers.

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NATIONAL HOMEOWNERSHIP RATE LOWEST IN ALMOST TWO DECADES
Millennial homebuyers in San Francisco may face bigger challenges here than they do in other parts of the country, but a new study from the National Association of Realtors says that the generation is also notably absent from the national market, leading to the lowest home-ownership rate in nearly 20 years.
According to the study, the national homeownership rate dropped to 64.8 percent in the separate quarter. The number of Americans who own homes peaked at 69 percent in 2004 and has been steadily declining for the last decade.
NAR attributes the decrease at least in part to the absence of first-time homebuyers, noting that student debt and lower-paying jobs have conspired to keep millennials out of the action.

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U.S. ECONOMIC GROWTH EXCEEDS EXPECTATIONS IN Q2
The U.S. economy performed better than expected in the second quarter, surely an optimistic sign that a full recovery is in store for the country’s housing market.
The Los Angeles Times reports that the nation’s gross-domestic-product output increased by 4 percent in the second quarter, besting previous predictions of 3.1 percent growth. Doug Handler, chief U.S. economist at IHS Global Insight, told the publication he expects the economy to expand by 3 to 3.5 percent in the second half of 2014.
The article notes that the U.S. economy added more than 230,000 jobs in July, the sixth consecutive month of 200,000-plus employment gains.

Statistics Reveal ‘Typical’ California Homebuyer

The typical California homebuyer is 48 years old and an ethnic minority, with a college degree and a household income of more than $100,000.
Those statistics come from the California Association of Realtors’ latest annual survey of homebuyers, conducted in the first quarter of 2014. The survey found that the average homebuyer today is the oldest in at least 12 years, climbing from 35 in 2012 to 38 in 2013 to 48 in 2014. By ethnicity 36 percent of buyers are white, with Hispanics and Asian/Pacific Islanders each accounting for 26 percent of the total and blacks accounting for 12 percent.
Measured by household income, 17 percent of buyers reported an annual income of more than $200,000, with 27 percent earning $150,000 to $199,999 and 27 percent bringing home $100,000 to $149,999. Twenty-five percent of buyers are paid $75,000 to $99,999 per year, while only 3 percent earn $50,000 to $74,999.
In the Bay Area, only 22 percent of residents could afford to buy a home in the first quarter of 2014, a huge drop from two years ago, when 45 percent of residents could afford a property. The minimum household income needed to join the ranks of Bay Area homeowners was $140,977 in Q1 2014, up 56 percent from Q1 2012.
Other statistics from the CAR report:

• Previous homeowners accounted for 59 percent of buyers in 2014, with 40 percent previous renters and 2 percent living most recently with their parents.
• All buyers viewed at least 10 homes before buying; 56 percent viewed 20 or more.
• The percentage of first-time buyers peaked at 54 percent in 2012. It slipped to 42 percent in 2013 before plunging to just 12 percent in 2014.
• Buyers moved a median distance of 15 miles from their previous home.
• Nine out of 10 buyers made offers on previous homes.
• Fully 54 percent of buyers reported that they bought their home because of a price decease.
• Similarly, 54 percent of buyers said they are fully satisfied with their purchase, while 46 percent said they selected the best option given the limited supply of homes. A year earlier, 66 percent said they were fully satisfied.
• Buyers said they plan to keep their current homes for an average of 8.8 years, up from 6 years in 2013.

(Image: Flickr/Mark Moz)

California Luxury Buyers Far Prefer Hilltop Views to Oceanfront Homes

Luxury homebuyers in California love hilltop views. An oceanfront home? Not so much.
Forty-one percent of buyers who purchased luxury homes in the state last year opted for a property with a hilltop view, according to a survey by the California Association of Realtors, which defines a luxury home as one costing $1 million or more. Just 10 percent bought an oceanfront home.
In fact, hilltop homes were so popular that they bested oceanfront homes and ocean-view homes combined (38 percent).
Sixteen percent of buyers in 2013 picked up luxury homes located near golf courses, followed by those in mountain areas (12 percent), resort areas (9 percent), lakefront (4 percent), and ski resorts (1 percent).

Most homes sold for $1 million to $2 million (76 percent), with 13 percent priced from $2 million to $3 million, 6 percent from $3 million to $5 million, and 3 percent from $5 million to $10 million.
Luxury buyers had a median income of $350,000, according to the survey, and a median age of 53. Seventy-one percent were Caucasian, 74 percent had a college degree, and 48 percent were single.
One-quarter of luxury buyers cited the desire for a larger home as the main reason for their purchase, while 20 percent said they wanted to upgrade their location.
The survey found that 35 percent of luxury buyers paid cash for their property, compared with 27 percent of traditional buyers and 11 percent of first-time buyers.
Because luxury buyers are likely to have larger incomes, they were also able to make average down payments of 30 percent — 5 percent higher than traditional buyers. Nearly 56 percent of luxury buyers financed their down payments via personal savings, while about 28 percent used proceeds from an investment.
In the Bay Area, luxury-home sales have jumped dramatically over the past year — up an average 27 percent from the first quarter of 2013 to the first quarter of 2014 in Pacific Union’s nine Northern California regions.
By the way, luxury buyers’ love of views was confirmed in another recent survey mentioned on Pacific Union’s blog. That Realtor.com survey found that 44 percent of buyers consider the home’s views of mountains, oceans, or cityscapes to be the second most important feature when considering a luxury purchase. The most important feature, at 54 percent, was a chef’s kitchen. 
(Image: Flickr/Sonny Abesamis)

A Reminder to Homebuyers: Annoy Sellers at Your Peril

Prospective buyers would do well to remember that they won’t get any closer to their goal of home ownership by annoying sellers.
This may seem an obvious point, but real estate professionals say buyers irritate sellers time and again. Transgressions range from failing to comply with a request to remove shoes while indoors on a rainy day to failing to call well in advance when canceling a scheduled walk-through.
Don’t forget that until the deal actually closes, the seller holds the ultimate trump card: the home itself. And it’s a seller’s market nowadays, particularly in the Bay Area, where single-family-home inventory has been constrained for the past year.
A recent article on Bankrate.com, a website that aggregates financial data, notes that “a little give-and-take is normal, but some buyers push the envelope, as well as the sellers’  buttons.” The article goes on to list eight ways that homebuyers may annoy sellers and jeopardize a purchase:
Skipping appointments: Failing to show up for a scheduled appointment, or canceling at the last minute, is simply rude; the seller may have spent half a day making the house spic-and-span for the visit. Unless there’s a last-minute emergency, buyers must show up on time.
Disregarding house rules: If you (the buyer) are touring a home, remember that it’s not yours (yet). Take your shoes off inside, if requested, don’t let children run amok, and respect the wishes of the seller.
Nitpicking: If you don’t like something in the house, but it’s not a negotiable flaw, be quiet about it while touring the property. Some sellers may secretly install cameras or microphones to listen in on conversations, so save any catty remarks for the car ride home.
Presenting a long list of flaws: Using a laundry list of perceived defects as a negotiating tool could backfire and make a seller wonder whether the buyer is seriously interested. The seller is more concerned with the bottom line than a buyer’s critical observations.
Requesting multiple visits: As a sale approaches closing, sellers are busy making repairs, packing up, and moving. They don’t have time to accommodate a buyer’s repeated requests to come in, look around, and ruminate on future plans.
Renegotiating after reaching a deal: Barring any surprises from a home inspection, the negotiated price should be the final price.
Generating ‘iffy’ commitment letters: You can understand where a seller would get nervous if, after an agreement has been reached, the buyer’s lender steps in with a letter asking the buyer to confirm his or her credit-worthiness. Save everyone a panic attack by securing the loan beforehand.
Speeding up the closing date: It’s understandable that an anxious buyer may want to move up the closing date, but the seller needs time to pack up and move out. An extra ounce of courtesy is always appreciated.


(Image: Flickr/Pall Spera Co.)
 

All-Cash Sales Reach All-Time High

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious:
NEARLY HALF OF U.S. HOMEBUYERS PAYING ALL CASH
More buyers than ever before are forgoing financing and paying all cash for homes, according to RealtyTrac’s Q1 2014 U.S. Institutional Investor & Cash Sales Report.
All-cash sales accounted for nearly 43 percent of residential real estate transactions in the first quarter, the highest since the company began recording that statistic in 2011. The number of U.S. buyers paying all cash jumped 24 percent from the first quarter of 2013, and the trend has been particularly prevalent in the Lake Tahoe and Northern Nevada regions, the report notes.
“The cash buyer segment of the Northern Nevada housing market is very strong,” Craig King, COO of Chase International, told RealtyTrac. “More than 50 percent of transactions in our Reno office were cash sales.”
The report also found that while institutional investor activity reached a two-year national low, it increased 92 percent annually in the San Francisco area – the second-largest increase in the country.

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CALIFORNIA SEES BIG MORTGAGE-DELINQUENCY DROPS
Mortgage-delinquency rates across the U.S. were at their lowest levels in nearly six years in the first quarter, with large declines in California helping to buoy the national recovery.
TransUnion’s most recent mortgage report shows that U.S. mortgage delinquencies dropped 24 percent year over year in the first quarter, the ninth straight quarter of decreases. Currently, the national mortgage-delinquency rate stands at 3.6 percent.
California posted annual mortgage-delinquency declines of about 37 percent, the second highest in the country. TransUnion says that while California’s delinquency rate was double the national average five years ago, it has fallen to 2.8 percent to outpace the rest of the country.

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PACIFIC HEIGHTS HOME SELLS FOR 70 PERCENT MORE THAN LIST PRICE
While multiple offers and overbids are commonplace in San Francisco, one homebuyer in the city’s prestigious Pacific Heights neighborhood has taken things to what some might call illogical extremes.
As Curbed reports, the two-bedroom home at 2514 Gough Street sold for $3.4 million, an astonishing 70 percent above its initial asking price of $2 million. Built in 1941, the home features amenities such as a gated courtyard entry, a Japanese rock garden, and a patio and garden area.
By comparison, the average San Francisco homebuyer paid about 10 percent above asking price for a single-family home in April, according to Pacific Union’s most recent monthly real estate report.

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AMERICANS BULLISH ON HOUSING AND JOB MARKETS
More Americans than ever believe now is a good time to sell a home, according to Fannie Mae’s April 2014 National Housing Survey.
Forty-two percent of survey respondents told Fannie Mae that the current market is right for sellers, which the company says is a record high. Only 5 percent of those surveyed felt that housing prices would decline in the next year, the study’s all-time low.
Just 12 percent of Americans reported having a smaller income than they did a year ago, also the lowest level Fannie Mae has recorded. The report notes that fewer people are worried about losing their jobs, which may attract more buyers to the housing market.
“Consistent with Friday’s upbeat jobs report, concern about job loss among employed consumers also has hit a record survey low,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said in a statement. “These results are in line with our expectations for increased housing activity and gradual strengthening of the housing market going into the spring and summer selling season.”


(Photo: Flickr/401(K) 2012)

Down Payments Declining in Changing Mortgage Scene

Good news for homebuyers: Average down payments are declining, a sign that lenders are serious about easing  home-loan requirements.

Many buyers assume they need to put down at least 20 percent of the purchase price in order to qualify for a loan, but the average down payment for a 30-year, fixed-rate mortgage in the first quarter of 2014 was 15.78 percent, according to data compiled by LendingTree. That’s down from 16.01 percent in the fourth quarter of 2013.

Also, average credit scores for LendingTree customers dropped 6 percent year over year, suggesting that lenders are more willing to consider a wider pool of borrowers.

“As the housing market improves and refinance activity declines, lenders are adapting their guidelines to improve credit accessibility for borrowers,” Doug Lebda, LendingTree founder and CEO, said in a statement.

“Relaxed lending guidelines translates to a larger pool of qualified homebuyers that could boost the housing recovery,” Lebda said. “While lenders still need proof that a borrower has the financial ability to repay the loan, lenders have started to accept lower down payments and credit scores from potential borrowers.”

Average down payments by state in the first quarter ranged from 12.31 percent in North Dakota to 19.36 percent in New Jersey. Unsurprisingly, California residents dropped the third largest down payments in the U.S. — 18.21 percent — slightly lower than buyers in New York, who put down an average of 18.54 percent.

The LendingTree data supports another recent study that found lenders have lowered borrowers’ minimum FICO credit scores and debt-to-income ratios over the past year to attract more business.

First-time buyers, who generally face the closest scrutiny from lenders, would do well to talk with a real estate professional for help finding a lender and prequalifying for a home loan before entering negotiations with a seller.

If you plan to buy a home in the Bay Area or the Tahoe/Truckee region, Pacific Union’s mortgage partner, Mortgage Services Professionals, can offer loan advice and consultation to help make your purchase a success. 

(Image: Flickr/Lucas Stanley)

Homebuyers Are Happy, Led by Millennials

Recent homebuyers are overwhelmingly happy with their purchases, according to a recent survey, but the reasons why depend on the age of the buyer.

Most younger buyers consider their homes strong investments, while older buyers view their new homes as a match to their changing lifestyles — typically choosing a smaller house after their children move out on their own.

These are just a few of the findings in agenerational trends study by the National Association of Realtors, based on a survey of more than 8,700 buyers and sellers.

Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger to 74 percent for buyers 68 and older.

The largest group of recent buyers are millennials — those under the age of 34 — who accounted for 31 percent of recent home purchases. Generation X buyers, born between 1965 and 1979, made up 30 percent of recent purchases, and younger baby boomers, born between 1955 and 1964, accounted for 16 percent.

“Given that millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand,” Lawrence Yun, NAR’s chief economist, said in a statement accompanying the survey results.

“Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people. However, the challenges of tight credit, limited inventory, eroding affordability, and high debt loads have limited the capacity of young people to own.”

The median age of millennial homebuyers is 29 and the median income is $73,600, according to the NAR study. They typically purchased an 1,800-square-foot home costing about $180,000.

In comparison, Gen X buyers’ median age is 40 with a median income of $98,200, and they tended to buy a 2,130-square-foot home costing $250,000.

Other findings from the survey:
Millennials were more likely to buy in an urban or central city area than older boomers.
Younger buyers tended to place higher importance on commuting costs than older generations. Older buyers were likely to place more emphasis on energy efficiency, landscaping, and community features.

• Millennials planned to stay in the home for 10 years, while those in the baby boom generation planned to stay for 20 years.
• Younger buyers tended to move to larger, higher-priced homes, but “there is a clear trend of downsizing to smaller homes among both younger and older baby boomers and the Silent Generation (those born between 1925 and 1945),” according to the study.
• Overall, 88 percent of recent buyers financed their home purchase. Nearly all (97 percent) millennials financed, compared with just 55 percent of Silent Generation buyers.
• Among the generations, Gen X (29 percent) is the largest group who are recent home sellers, followed by older boomers (22 percent) and younger boomers (21 percent).

(Image: Flickr/Tony Hoffarth)