Elaine’s Newest MLS Condo Reports for 11/13/2012

Here are my updates for November 13th, 2012

11-13-2012  New MLS Condo Report
11-13-2012 MLS Condo Inventory
11-13-2012 MLS Caravan

First Time Home Buyers in California

California’s potential first-time homebuyers (aged 25-34) numbered 5,404,486 in 2011. At the same time, the state’s homeownership rate stood at 55.3%. California homeownership has dropped steadily during 2012. It will level off around 2016 as a wave of now-tenants enter (or re-enter) the market as buyers.

California’s homeownership rate continues its fall in the aftermath of the Great Recession. Will the next wave of first-time homebuyers bring a sea change?

Chart updated 10-31-2012

First Tuesday Analysis

Do first-time homebuyers influence the homeownership rate?

Over the past decade, they did not. Homeownership dropped even as the number of 25-34-year-olds (the typical age of first-time homebuyers),rose. This age group, which currently consists of Generation Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s. (Gen Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s.), has had little effect on homeownership since the crash. Why?

Homeownership enemy #1: Un- or under-employment

The biggest obstacle for Gen Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s. is employment. Or rather, lack of employment. Diplomas in hand, Gen Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s. seeks work only to be rebuffed by California’s still-recovering job market. Some return to school in order to defer education loans. In the process, they take on more debt and further push off homeownership.

As of August 2012, California still needs 1.1 million jobs to regain pre-recession employment levels. Annual average population growth among working-age residents since 2007 has run above 200,000 per year, according to the Census. That means an additional 100,000 additional jobs are needed, on top of the 1.1 million. That’s a whole lot of competition for gainful employment.

Many Gen Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s.-ers have solved their insolvency dilemma by moving in with friends or family. They are financially unable to support themselves, let alone begin saving for a downpayment.

Homeownership enemy #2: Student debt

Heavy loads of student debt are also part of the problem. Payments on all debt cannot exceed a standard 41% back-end debt-to-income ratio (DTI). This includes the mortgage, auto loans, credit card debt and education loans. Most college grads will have to clear their student debt before qualifying for a home loan. This process typically takes up to ten years for Federal loans.

The headwinds facing Gen Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s. mean notions of the typical first-time homebuyer must be revised. In today’s economic climate, the 25-34 age group may be too young for targeting as first-time homebuyers. Instead, 30-40 years might be a better range for the typical age of future first-time buyers. Our poll will help to define the years.

First-time homebuyers will likely begin their foray into the housing market around 2016, peaking around 2018-2020. At that time, the homeownership rate will have leveled out, probably around 51%. Together with former distressed homeowners-turned-tenants, they will gradually drive up the homeownership rate.

Elaine
DRE #00598428
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed

“Fewer properties for sale with such remarkably low interest rates make it a great time to buy and not a bad time to sell”

Advertisements