The housing slump may have sidelined many homeowners unable to trade up in the sluggish market, but first-time California buyers have dramatically increased their share of home purchases in the past year.
First-time home buyers accounted for an estimated 45% of all California home sales this year, up sharply from 37% in 1990, according to the California Assn. of Realtors’ 1991 housing finance survey. That was the highest percentage of first-time buyers recorded since 1981, when CAR began conducting the survey, which is based on second-quarter sales transactions reported by about 1,500 Realtors around the state.
The absolute number of first-time buyers increased as well. In 1990, according to figures supplied by CAR, 165,200 of the 446,360 homes sold were purchased by first-time buyers. This year, first-time buyers are expected to purchase 189,000 of 420,000 homes forecast to be sold.
“The increase shows that there’s a significant group of new people coming into the home market; they are going to be the foundation for (any) housing recovery,” said Mack Powell, president of CAR.
Powell said first-time home buyers are taking “advantage of extremely low interest rates, favorable prices and a wide selection of properties. For many people,” he added, “all of these conditions added up to the right time to buy their first home.”
But a separate study released Wednesday by the Census Bureau found that the typical home purchased by a first-time buyer in 1988 and 1989 was a fixer upper, without such frills as a dishwasher, second bathroom, central air conditioning or a fireplace.
“The homes the first-time buyers are bying are not as nice as those (of) other recent buyers,” Census Bureau statistician Barbara Williams told the Associated Press.
The Census Bureau survey of 1.7 million transactions involving first-time home buyers in 1988 and 1989 found that fewer than half of their homes had central air conditioning. About one-third had fireplaces and less than two-thirds had dishwashers. The homes were also more likely to be run down. About 6% had moderate or severe physical problems, compared to 4% for other buyers’ homes.
But real estate industry officials said first-time home buyers have done better in recent months in the wake of softer housing prices and lower interest rates.
A greater share of first-time home buyers purchased single-family homes this year than in the past couple of years, the survey found.
About 75% of the state’s first-time buyers chose to buy single-family homes, up from 72% in 1990 and 67% in 1989. Condominiums remained an affordable alternative for many buyers, with about 23% of this year’s first-time buyers selecting condos, down slightly from 26% in 1990.
First-time home buyers also made smaller down payments than in the past because they bought lower cost homes. They made a median down payment of $20,000 this year, compared to $24,300 in 1990 and $27,000 in 1989.
The better deals may stem not only from the softer housing market but also from the fact that buyers are older and, perhaps, wiser: The median age of first-time home buyers in California was 32 years in 1991, up from 31 in 1990 and 30 in 1989, according to the CAR. The median age indicates that half of the first-time buyers were younger and half were older.