Homing In on Changes, New Buyers in Housing Market
After owning two homes in Denver, and with the sale of one of them accounting for all the money in my piggy bank, I naturally wanted to check out the housing market after getting a job in Orange County.
It was probably somewhere in 1988 but after getting a look-see at house prices, I stopped dead in my tracks. A home-owning colleague, however, urged me to stay the course.
“It’s impossible to lose money in California real estate,” he said. “People have been saying for 20 years that prices can’t keep going up, but they always do.”
That colleague is no longer in the newspaper business and, thankfully, never was in the real estate business.
I’ve remained a lowly renter, but nowadays you can’t help but hear the siren song of homeownership, especially as prices fall and interest rates remain low.
But lots of potential buyers still are wary, perhaps fearful of an economy that’s hard to count on.
For the last several months, the Anaheim Assn. of Realtors has been beckoning to first-time home buyers, trying to persuade them at monthly seminars that the world isn’t coming to an end and that homeownership is within their grasp.
Ken Garneau, an association member and senior loan officer at Western Cities Mortgage Corp. in Tustin, said the seminars are directed toward low- and moderate-income families who are probably first-time buyers. The latest seminar was Saturday and the next one is scheduled Nov. 20 at association offices at 240 S. Euclid St. in Anaheim.
Some longtime real estate agents still probably can’t believe that such seminars are needed in California, where, as Garneau says of years gone by, “if you had 20% down and a heartbeat, you could get a loan.”
In recent years, however, that perception has changed. Part of Garneau’s task in conducting the seminar is to reverse the perception again.
The big picture, Garneau said, is that it’s easier now to break into the home-buying market than in recent memory. Interest rates are low, prices continue to fall, loan limits have been increased and other federal government actions have made it easier for buyers and sellers to negotiate. Garneau noted, for instance, that FHA loans run as low as 3%.
Given that, I asked, why isn’t the market exploding. “Most of it is consumer confidence,” Garneau said. “There’s plenty of money out there.”
The seminars are focusing on first-time buyers because they historically have stoked the market, Garneau said. Existing homeowners can’t step up to a higher-priced home without someone first buying their house. And the sale of existing homes is even more important now because new home sales are sluggish, he said.
The Anaheim association is confident that first-time buyers will shake their wariness. Statewide figures tend to bear out that feeling. In 1989, 38.9% of the home buyers were first-timers, Garneau said. That percentage dropped in 1990 but by last year had risen to 48.6%.
I asked Garneau what he’s been hearing from potential buyers at the seminars. “They’re totally unaware of the different financing options available to them. They’re unaware they can purchase a home for 5% down, or that there’s mortgage assistance through their cities. My major theme has been educating the public. All they hear in the marketplace is gloom and doom, how people are losing jobs, and they’re scared.”
They also hear conflicting reports on a wide range of economic indicators, and the resulting confusion creates hesitation, he said. Another factor, he conceded, is that buyers are waiting for prices to drop even further.
Garneau wishes people would quit trying to guess when rock-bottom will hit. “I think prices right now are unbelievable. There are some great buys out there.”
Don’t you have to say that? I suggested. “I actually believe it,” he said. “I see property values dropping twenty, thirty thousand dollars on houses I refinanced a couple years ago.”
Lenders finally realized that had prices continued spiraling upward, first-time buyers couldn’t buy. Belatedly, he said, the housing industry realized that it had to cater to novice buyers.
Garneau talks about the housing industry now “correcting” itself from the excesses of the 1980s.
He and the rest of the industry only hope that the profligacy of the last decade didn’t cost them an entire generation of buyers.
Dana Parsons’ column appears Wednesday, Friday and Sunday. Readers may reach Parsons by writing to him at The Times Orange County Edition, 1375 Sunflower Ave., Costa Mesa, Calif. 92626, or calling (714) 966-7821.
