Lower seasonal home prices allowed more Californians to afford a home purchase in the fourth quarter of 2018, compared to the previous quarter, but higher interest rates pushed affordability lower compared to the previous year, according to the California Association of REALTORS®’ (C.A.R.) “Housing Affordability Index” (HAI).

C.A.R. said 28 percent of California households could afford to purchase the existing $564,270 median-priced home in the fourth quarter of 2018, which was up from 27 percent in third quarter of 2018 but down from 29 percent a year ago.

In San Diego County, only 24 percent of local households could afford to purchase the $625,950 median-priced home in the 2018 fourth quarter, up from 23 percent in the 2018 third quarter but down from 26 percent a year ago. 

"Affordability has been challenging the past few years in San Diego County. We’re facing a soft market right now in San Diego as prices remain flat while some buyers are remaining on the sidelines,” said Robert Calloway, 2019 PSAR President. “However, the market fundamentals, such as job growth, income growth and household formation, are still strong. Mortgage rates are down slightly and buyers are looking for deals because the time on market has gone up which has increased the housing supply, but they're no longer fighting each other tooth and nail to get in the front door.”

C.A.R. said its index has been below 30 percent for six of the past eight quarters. California’s housing affordability index hit a peak of 56 percent in the first quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. The index is considered the most fundamental measure of housing well-being for homebuyers in the state.

To afford to qualify to purchase the statewide median-priced, single-family home of $564,270 in the fourth quarter 2018, a household would need a minimum annual income of $122,340 to make the necessary monthly payments of $3,060. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, assumes a 20 percent down payment and an effective composite mortgage interest rate of 4.95 percent. The effective composite interest rate was 4.77 percent in third-quarter 2018 and 4.17 percent in fourth-quarter 2017. 

In San Diego County, C.A. R. said a minimum annual income of $135,710 would be needed to make monthly payments of $3,390 on a 4.95 percent interest rate mortgage loan.

“One of the biggest things with the affordability of homes here in San Diego is typically household income levels, but we’re in a more favorable position when compared to other markets like the Bay Area and the Silicon Valley,” said Calloway. “Too many builders have focused on luxury homes, and there hasn't been enough construction of affordable starter homes. Fortunately, recent inventory increases and the slowdown in house price appreciation is good news for home buyers.”

C.A.R. also said housing affordability for condominiums and townhomes edged up in fourth-quarter 2018 compared to the previous quarter with 37 percent of California households earning the minimum income to qualify for the purchase of a $460,000 median-priced condominium/townhome, up from 36 percent in the third quarter. An annual income of $99,730 was required to make monthly payments of $2,490. Thirty-eight percent of households could afford to buy a condominium-townhome a year ago.

Compared with California, more than half of the nation’s households (54 percent) could afford to purchase a $257,600 median-priced home, which required a minimum annual income of $55,850 to make monthly payments of $1,400.

Other key points from C.A.R.’s fourth-quarter 2018 Housing Affordability report included:

-- Housing affordability improved from fourth-quarter 2017 in 10 tracked counties and declined in 30 counties. Affordability in eight counties remained flat.

-- All but one county in the Southern California region posted a decrease in affordability compared to a year ago. Affordability declined in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. Only Ventura County recorded an improvement.

-- During the fourth quarter of 2018, the most affordable counties in California were Lassen (66 percent), Kern (53 percent) and Kings and Siskiyou (both at 50 percent). The minimum annual income needed to qualify for a home in these counties was $52,030 or less.

-- Mono (12 percent), Santa Cruz (12 percent), San Mateo (15 percent), San Francisco (15 percent) and Santa Clara (18 percent) counties were the least affordable areas in the state. San Francisco and San Mateo counties had the highest minimum qualifying incomes in the state. An annual income of $326,290 was needed to purchase a home in San Francisco County, and an annual income of $329,300 was required in San Mateo County.

PSAR members filled a packed room this week at the East County Service Center in El Cajon to look into the future and hear “2019 Housing Market Outlook,” a presentation from Oscar Wei, senior economist, California Association of REALTORS® (C.A.R.).

Wei told PSAR members that housing market conditions in California will continue soft in 2019 as prices remain flat and sales pull back throughout the year because buyers are expected to remain on the sidelines.

“The overall market will continue on a declining trend,” Wei said. “Many California consumers believe home prices will be flat or falling next year, and any growth will be at a very modest pace.”

Wei also said the interest rates, which recently dropped due to economic uncertainties, will eventually climb higher. In addition, if a second government shutdown occurs, similar to the recent 35-day partial shutdown which exacerbated partisan divisions, then the real estate market and U.S. economy could be negatively impacted.

According to Wei, current market fundamentals, including positive job growth, income growth and household formation, are still solid even though sales are down double-digits despite recent declines in interest rates. Meanwhile, price growth remains near its lowest levels since early 2012. Still, a window of opportunity is currently open for buyers, he said.

“Many buyers should buy now before interest rates climb higher in the near future,” said Wei. “Inventory levels are improving, yet a tight supply led to one third of sales closing above asking price in 2018. Fortunately, active listings increased for the ninth month in a row through November.

“The Fed has raised interest rates nine times since December 2015. If interest rates increase too fast, then economic growth will come to a halt.”

Wei also offered highlights from C.A.R.’s annual homebuyers survey, including:

• Most recent buyers ended-up compromising in some way, either by paying a higher price for a smaller home than desired or living a farther distance from work or schools.

• The reasons why most buyers delay buying sooner include saving for a down payment, waiting for finances to improve and prices to stabilize or difficulty qualifying for a mortgage.

• 80 percent of recent buyers had been saving for buy for more than one year.

• The net cash gain to sellers of roughly $200,000 has been the highest since 2006.

He said California cities are still not allowing construction of a sufficient supply of new homes: the California Department of Housing and Community Development projects that 180,000 new units are needed annually to keep up with demand.

Wei also discussed local market activity. In Chula Vista, 1,589 homes sold in 2017, compared to 1,407 in 2018, a decline of 11.5 percent. In El Cajon, 1,162 homes sold in 2017, compared to 1,133 in 2018, a decline of 2.5 percent. In San Diego County, 7,412 homes sold in 2017, compared to 6,774 in 2018, a drop of 8.6 percent.

The median price per city was as follows: Chula Vista -- $570,000 in 2017, $569,500 in 2018, a difference of 0.1 percent; El Cajon -- $530,000 in 2017, $575,000 in 2018, an increase of 8.5 percent; San Diego -- $640,000 in 2017, $695,000 in 2018, an improvement of 3.1 percent.

Wei concluded his remarks by saying seven out of 10 Americans still believe that owning a home is an important part of the American dream, and 45 percent of home shoppers plan to purchase within the next five years.

Below are a few links to go to for more statistical housing market resources.  These resources are for Realtor members and will require a CAR login. 

Data & Statistics                              https://www.car.org/marketdata/data

Housing Affordability Index       https://www.car.org/marketdata/data/haitraditional

Housing Matters Podcast             https://www.car.org/marketdata/podcast

Market Minute                                  https://www.car.org/marketdata/marketminute

County Market Updates               https://www.car.org/marketing/chartsandgraphs/marketupdate

Interactive Market Stats               https://www.car.org/marketdata/interactive

Market Snapshot                            https://www.car.org/marketing/chartsandgraphs/marketsnapshot

Housing Market Webinar             https://www.car.org/knowledge/multimedialibrary/webinars/market

Also, click here to view Oscar Wei's Presentation.

Get the latest facts on property management legislation!

Friday, February 15, 2019; 
9:00 AM - 11:00 AM
PSAR South,
880 Canarios Ct., Ste. 100,
Chula Vista, CA 91910

Cost: FREE to PSAR members, $20 for Non-Members

  REGISTER HERE  

Discussion topics will include:

• Legislative Update from the San Diego Apartment Association (SDCAA)
• C.A.R. Updates
• Rent Control
• Just Cause Eviction
• Information sharing

Discussion leaders:

• Brad Wilson, REALTOR®
• Eric Sutton, REALTOR®
• Molly Kirkland, Public Affairs Director with SDCAA

 

REMINE TRAINING

Remine is a powerful tool combining visualization of in-depth property data with predictive analytics. Here's what you will learn in this training:

• Remine enriches the information you see in your MLS front end Buyers’ agents can quickly submit a request.
• Search for advanced data fields to improve your farming.
• Build your own property tracking databases in Remine
• Make the most of Remine’s predictive analytics features

The cost to take this class is FREE. PSAR is offering this training in three locations and dates. See below:

  REGISTER HERE    FOR:
February 14th, 11:00 AM - 12:00 PM
PSAR Central, 4340 Genesee Ave., #203, San Diego CA. 92117

  REGISTER HERE    FOR:
February 20th, 11:00 AM - 12:00 PM
PSAR East County, 1150 Broadway, Ste. 100, El Cajon, CA 92021

   REGISTER HERE   FOR:
February 26th, 11:00 AM - 12:00 PM
PSAR South County, 880 Canarios Ct., Ste. 100, El Cajon, CA 91910

California home sales declined for the eighth straight month in December 2018, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R). The year finished with fewer sales for 2018 for the first time in four years. For the year as a whole, sales statewide were down 5.2 percent from 2017.

December’s sales figure was down 2.4 percent from the revised 381,400 level in November and down 11.6 percent from sales in December 2017 of 420,960. December marked the fifth month in a row that sales were below 400,000 and the lowest level of sales sold since January 2015.

Sales in San Diego in December 2018 were 7.4 percent lower compared to November 2018, and down 14.7 percent from December 2017.

“The housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months,” said C.A.R. President Jared Martin. “This trend is expected to continue, as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.

“Additionally, housing markets in and around the wildfire areas have been exhibiting unusual patterns that could remain unsettled for the next few months. The impact, however, is confined mostly within the region and should not have a noticeable effect in the housing market at the state level.”

C.A.R. said the statewide median home price in December 2018 was $557,600, which was up 0.5 percent from $554,760 in November 2018 and up 1.5 percent from a revised $549,550 in December 2017. The statewide median home price for the year as a whole was $570,010, up 6.0 percent from $537,860 in 2017.

In San Diego, the median home price in December 2018 was $618,500, which was 1.2 percent lower than the $626,000 figure for November 2018 and 2.2 percent higher than the $605,000 figure for December 2017.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 372,260 units in December 2018, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“California’s housing market in 2018 was hindered by endlessly rising home prices and interest rate hikes, which combined to erode housing affordability and hamper home sales,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “As a result, while the statewide median home price surpassed its previous peak and set a new record in 2018, annual home sales fell for the first time in four years to a preliminary 402,750 closed escrows in California, down from 2017’s pace of 424,890.

“In the coming months, we expect a brief hiccup in sales as the government shutdown temporarily delays closings due to interruptions in IRS income verification or the processing of HUD, VA and USDA loans,” said Appleton-Young.

Other key points from C.A.R.’s December 2018 resale housing report included:

• The median number of days it took to sell a California single-family home rose from 25 days in December 2017 to 32 days in December 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 27 days in December 2018, compared to 22 days in November 2018 and 18 days in December 2017.
• Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).
• The Unsold Inventory Index, which is a ratio of inventory over sales, increased year-to-year from 2.5 months in December 2017 to 3.5 months in December 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, Central Valley and Southern California regions, with the Central Coast dropping the most at 24.9 percent.
• Thirty-nine of the 51 counties reported by C.A.R. posted a sales decline in December with an average year-over-year sales decline of 20 percent. Thirty-four counties recorded double-digit sales drops on an annual basis, and 10 counties experienced an increase in sales from a year ago.
• The 30-year, fixed-mortgage interest rate averaged 4.64 percent in December, up from 3.95 percent in December 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in December to an average of 4.02 percent from 3.39 from December 2017.

In other recent real estate and economic news, according to news reports:

• A new Zillow survey found that 27 percent of new homes in San Diego County experienced some price reduction in the fourth quarter, a 5 percent increase from the first quarter of 2018. Nationally, Zillow found that 25 percent of new homes experienced a price reduction in the fourth quarter, compared with 19.2 percent of homes in the first quarter of last year. Zillow said home shoppers nationwide may be able to find a better deal on a new home now than they could a year ago. Price cuts were more common in the fourth quarter than in the first quarter of last year, Zillow reported.
• CoreLogic recently reported that San Diego home prices were up 1.1 percent in November, after two months of decline. The real estate tracking company also said the median price in November was $565,000, which was $18,000 less than an all-time peak reached in August. 2018.
• The national economy is cooling but whether a recession is around the corner and how much a slowdown would affect the San Diego area is still an open question, according to local economists who met at the annual San Diego County Economic Roundtable at USD.
• San Diego County is one of the least affordable places to live in America, and renters know it. In 2017, 57 percent of the county’s renters were considered burdened by their housing costs, meaning they spent 30 percent or more of their income on rent and utilities. The figures come from data recently released by the Census Bureau’s American Community Survey. The problem is even worse for the 28 percent of renters in the county who spent more than half their income on rent and utilities in 2017. People with higher rent burdens are more likely to skip doctor appointments and avoid paying for medications, and they are less likely to save money.
• Demand for rental apartments has reached near record highs in San Diego, according to RealPage, a national property management and software company. San Diego was among 17 metro markets where apartment occupancy rates were at their highest in the third quarter of 2018, higher than they’ve been in the past 15 to 20 years. Occupancy rates in San Diego were the highest they’ve been in about 15 years, the company said.
• A new survey suggests a general dissatisfaction with the way things are going in California, mixed with politics to create a highly toxic brew. According to Competitive Edge’s recent poll of 806 likely voters, 15 percent of voters are seriously considering leaving and another 13 percent are giving it some thought.
• According to a recent survey from the Public Policy Institute of California, the 60 percent of respondents identified as likely voters are predicting that children growing up today in California will face a bleaker financial furniture than their parents. Sixty-seven percent of respondents said that the state was divided into haves and have-nots, and 45 percent considered themselves have-nots.
• San Diego County’s job market finished 2018 on a strong note. The local non-adjusted unemployment rate remained at a historic low of 3.2 percent in December, according to the California Employment Development Department. That’s unchanged from a revised 3.2 percent in November and below the 3.3 percent rate a year ago. The county lost 1,500 net positions in December. But year-over-year, payrolls added 28,400, up 1.9 percent.

Help your clients by gaining the knowledge you need on the 2019 real estate housing market.

Presented by C.A.R. Senior Economist Oscar Wei. 

Wednesday, February 6, 2019, 11:30 AM* - 1:00 PM
(*Lunch starts at 11:30 AM and the presentation starts at 12:00 PM)

Seats are limited.
 REGISTER HERE 

PSAR East County, 1150 Broadway, Ste. 100, El Cajon, CA 92021
COST: (Lunch included), Members: $5.00, Non-Members:$10.00

Oscar Wei is the Senior Economist for the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). Wei analyzes housing market conditions, consumer behavior, and public policy issues through the use of transactional data and survey research studies conducted by C.A.R. He assumes the managerial responsibility of data mining and analyzing housing market statistics released to the public on a regular basis.

Oscar’s areas of expertise are:

• Economic and Policy Analysis
• Housing Markets: U.S., CA, Local/Regional
• Analytics in real estate finance
• Consumer research in real estate
• Trends identification
• Housing market forecast
• Survey planning

Oscar earned a Bachelor of Science Degree in Economics from the University of California, Berkeley and a Master of Science Degree in Economics from the California State Polytechnic University, Pomona.

Oscar contributes frequently to C.A.R’s market analysis articles, Housing Matters blog, and Market Snapshot, and has written on topics like housing supply, distressed sales, housing tax policy, housing affordability, and many other subjects relevant to the real estate industry.

Thank you to our sponsors:

 

 

What’s in store for the year ahead in the housing market?

The California Association of REALTORS® (C.A.R.) reports that a combination of high home prices and eroding affordability is expected to cut into housing demand and contribute to a weaker housing market in 2019.

C.A.R. is projecting a 3.3 percent decline in existing single-family home sales in 2019, down from a projected 410,460 in 2018 to 396,800 in 2019. The 2018 figure is 3.2 percent lower compared to the 424,100 homes sold in 2017.

“While home prices are predicted to temper next year, interest rates will likely rise and compound housing affordability issues,” said C.A.R. 2018 president Steve White. “Would-be buyers who are concerned that home prices may have peaked will wait on the sidelines until they have more clarity on where the housing market is headed. This could hold back housing demand and hamper home sales in 2019.”

C.A.R. also is forecasting growth in the U.S. gross domestic product of 2.4 percent in 2019, after a projected gain of 3.0 percent in 2018. With California’s nonfarm job growth at 1.4 percent, down from a projected 2.0 percent in 2018, the state’s unemployment rate will remain at 4.3 percent in 2019, unchanged from 2018’s figure but down from and 4.8 percent in 2017.

C.A.R. also predicts the average for 30-year, fixed mortgage interest rates will rise to 5.2 percent in 2019, up from 4.7 percent in 2018 and 4.0 percent in 2017, but will still remain low by historical standards.

Rising mortgage interest rates coupled with higher home prices in California is expected to mean that only 25 percent of households statewide will be able to afford a median-priced home in 2019, said C.A.R. If the past is any indication, the percentage of households that will be able to afford a single-family home in San Diego County next year will be even fewer.

The median home price statewide is forecast to increase 3.1 percent to $593,450 in 2019, following a projected 7.0 percent increase in 2018 to $575,800, according to C.A.R.

“The surge in home prices over the past few years due to the housing supply shortage has finally taken a toll on the market,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “Despite an improvement in supply conditions, there is a high level of uncertainty about the direction of the market that is affecting homebuying decisions. This psychological effect is creating a mismatch in price expectations between buyers and sellers and will limit price growth in the upcoming year.”

Outmigration, resulting from the state’s housing affordability issue, will also be a primary concern for the California housing market in 2019 as interest rates are expected to rise further next year. The high housing cost is driving Californians to leave their current county or even the state.

According to C.A.R.’s 2018 State of the Housing Market/Study of Housing: Insight, Forecast, Trends (SHIFT) report, 28 percent of homebuyers moved out of the county in which they previously resided in 2018, up from 21 percent in 2017.

The outmigration trend was even worse in the Bay Area, where housing was the least affordable, with 35 percent of homebuyers moving out because of affordability constraints. Southern California did not fare any better as 35 percent of homebuyers moved out of their county for the same reason, a significant jump from 21 percent in 2017. The substantial surge in homebuyers fleeing the state is reflected by the home sales decline in Southern California, which was down on a year-over-year basis for the first eight months of 2018.

Outmigration will not abate as long as home prices are out of reach and interest rates rise in the upcoming year, said C.A.R.

California home sales continued their downward trajectory trend across the state for the seventh consecutive month in November as prospective buyers continued to wait out on the sidelines, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R).

November’s sales figure was down 3.9 percent from October and 13.4 percent from November 2017. Homes were selling at a seasonally adjusted annual rate of 381,400 units in November, compared to 440,340 a year ago. November marked the fourth month in a row that sales were below 400,000.

Sales in San Diego were down 8.4 percent in November 2018 from October 2018 and 11.0 percent compared to November 2017.

“While many home buyers continue to sit on the sidelines, serious buyers who are in a position to purchase should take advantage of this window of opportunity,” said C.A.R. President Jared Martin. “Now that interest rates have pulled back, home prices have tapered, and inventory has improved, home buyers’ prospects of getting into a home are more positive.”

C.A.R. said November’s statewide median home price declined to $554,760, down 3.0 percent from $572,000 in October but up 1.5 percent from a revised $546,820 in November 2017.

Prices are falling in San Diego as well. The median price in November 2018 was $626,000, down 1.5 percent from $635,500 in October 2018, but still 1.0 percent above last November’s $619,900.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 381,400 units in November, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the November pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“The slowdown in price growth is occurring throughout the state, including regions that have strong economic fundamentals such as the San Francisco Bay Area,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The deceleration in home price appreciation should be a welcome sign for potential buyers who have struggled in recent years against low inventory and rapidly rising home prices.”

Other key points from C.A.R.’s November 2018 resale housing report included:

• Statewide active listings rose for the eighth consecutive month after nearly three straight years of declines, increasing 31 percent from the previous year. November’s listings increase was the largest since April 2014.
• The median number of days it took to sell a California single-family home edged up from 22 days in November 2017 to 28 days in November 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 22 days in November 2018, compared to 24 days in October 2018 and 17 days in November 2017.
• The unsold inventory index, which is a ratio of inventory over sales, increased year-to-year from 2.9 months in November 2017 to 3.7 months in November 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• On a region-wide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, and the Southern California regions, while the Central Valley region experienced a relatively small sales dip of 3.9 percent.
• Forty-one of the 51 counties reported by C.A.R. posted a sales decline in November with an average year-over-year sales decline of 16.8 percent. Twenty-six counties recorded double-digit sales drops on an annual basis.
• The 30-year, fixed-mortgage interest rate averaged 4.87 percent in November, up from 3.92 percent in November 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in November to an average of 4.11 percent from 3.24 from November 2017.

In other recent real estate and economic news, according to news reports:

• San Diego leads the nation with the most home price reductions this year. The share of home listings with a price cut grew to its highest level in at least eight years, says a recent analysis from Trulia. San Diego had the most reductions, 20.5 percent, of the 100 biggest metro areas in the United States so far this year. San Diego was tied with Tampa, which also saw 20.5 percent of homes with a price cut.
• The San Diego metropolitan area has been ranked as the fifth least popular home buying market for millennials in the United States, according to the latest LendingTree report. The company found that San Diego-area millennials only accounted for about 35 percent of the home loan purchase requests for the first 11 months of the year. Tampa was ranked as the least popular market for millennial homebuyer loan requests, followed by Las Vegas, Miami and Orlando. Salt Lake City topped the list for the most millennial home loan requests at 51 percent. It was followed by Minneapolis and Pittsburgh, where nearly half of the requested loans were from millennials.
• Few millennial renters can afford down payment on a home. According to Apartment List’s 2018 Millennial Homeownership Report, 88 percent of millennial renters in San Diego say that they plan to purchase a home at some point in the future, but just 3 percent expect to do so within the next year, while 37 percent say that they won't buy for at least five years. The survey of 6,400 millennial renters found that while the overwhelming majority of those surveyed would like to purchase a home at some point in the future, far fewer are financially prepared to do so in the near term. Of the millennial renters in San Diego who plan to purchase a home, 59 percent have zero down payment savings, while just 14 percent have saved $10,000 or more, according to the survey.
• With average rents nearing $2,000 a month, San Diego may be one of the pricier places for millennial renters in the U.S. Despite the cost, however, a survey by the rental platform company Zumper said that only 2 percent of millennials are getting help from their parents for rent. San Diego appears to be the most independent city with only 2 percent of respondents who had their parents help with rent, compared to 24 percent in Detroit. Austin had the second largest proportion of millennials in need at 23 percent.
• San Diego had the second lowest unemployment rate among California’s most populous metro areas this year between July and September, according to a report released Wednesday by the San Diego Regional Economic Development Corp. San Diego’s third-quarter unemployment rate sat at 3.2 percent, bested only by San Francisco at 2.5 percent. The rates in both cities fell 0.5 percent between the second and third quarters. Compared to the other most populous metro areas in the country, San Diego ranked 10th in the third-quarter unemployment rate.

By Jan Farley, 2018 PSAR President

During this holiday time of year, I would like to take a moment to share with you some reflections about the importance of our Association and our real estate profession, as well as your role as a REALTOR® or affiliate member assisting people with their housing needs.

I am so proud to be part of an industry that is making such a difference in the lives of people. Our jobs in real estate play a vital part in improving our culture and society. Our efforts are commendable for a variety of reasons.

The importance of a home can never be underestimated. It’s the place where you hang your hat, is a link to the past and through its doors one walks into the future. Home is where the heart is, but it goes much deeper than that. No matter what place you call home, the very word strikes a chord deep inside each of us.

A home can be a gathering place, shelter and sanctuary, providing escape from the busyness and intrusiveness of the world. A comfortable home can be a tremendous source of strength and reassurance. A healthy home is a vital ingredient in the pursuit of a meaningful life. In seasons of war or peace, poverty or plenty, even social, geopolitical and economic upheaval, our homes remain central to the ties of family and community. Our homes are primary when we reflect on the past and create future memories that will last a lifetime. A home can mean sanctuary, a place where we can rest, relax, enjoy time with friends, learn, grown and just be. Our homes can say a lot about who we are and what we think is important in life. As we define home, we also define ourselves in relation to it.

Let me remind you that the real estate industry is closely tied to the civil and religious liberty our nation offers to all. Like the cornucopia on a kitchen table, the diversity seen in our homes and lifestyles are reflective of previous generations who came from many countries, cultures and creeds. Whenever our ancestors joined in fellowship in a celebration of expectation, it foreshadowed the dreams that we still share today of living together in our own homes in peace with respect and love for our neighbors and communities, and with heartfelt gratitude for the blessings of life. Humans have clearly evolved to be homebuilders, homemakers and home-nesters. Our homes are at the tip of the countless blessings we all enjoy in this great land.

Each of us, starting at our front porch, can be an instrument of goodwill to those we touch as we clasp the hand of friendship with our brothers and sisters in the larger family of humankind. This is why REALTORS® participating in the American dream of homeownership is so important to our nation. Home ownership is as vital as the guiding light of freedom.

Granted, the transaction process, with affordability and financing challenges, can be one of the most grueling experiences for ourselves and our clients. Struggles in life certainly shape us, building character. And, I admire every one of our PSAR members who work long hours, facing stress, exhaustion and strained relations on behalf of their clients. I admire your creativity, intuitive guidance, imagination, inspiration and perspiration.

But, after all the papers are signed and the escrow closes, when another happy family is handed the front-door keys, there’s an exhilarating rush of satisfaction and a “job-well-done” that we feel inside. There’s nothing quite like helping a family with their real estate transaction. They may see their home as their place to feel safe and invest their hopes, dreams and wishes as a foundation for their future. So, as we close out one year and begin a New Year, thanks for your support to PSAR and for your efforts in our industry. The past is a resource, but the future is where hope lives. Happy Holidays!

The California Association of REALTORS® (C.A.R.) recently conducted a consumer survey of California homebuyers. The survey examined the attitudes and behaviors of real estate consumers. According to its 2018 State of the California Consumer Survey, California’s competitive housing market and low housing affordability are forcing homebuyers to make compromises in their home purchases including price, size, location, and school quality.

The survey revealed that 44 percent of buyers bought a more expensive home than they wanted, 33 percent purchased a smaller home than desired, 36 percent purchased a home further from school or work than wished, and 30 percent purchased in an area where schools were of lesser quality.

“Well-qualified homebuyers understand that buying a home can be challenging in a competitive housing market environment and they may not be able to buy the ideal home they want,” said 2019 C.A.R. President Jared Martin. “Instead of finding a home that’s a perfect fit, they are finding a home that’s a good enough fit.”

Buying Experience

Buyers were not deterred by higher home prices and tight housing supply conditions but waited until their financial situations improved or to save for a down payment. Buyers typically saved for five years, and nearly a quarter of those who purchased a home priced $1 million or higher saved more than 10 years.

The source of down payment for the majority of home buyers was their personal savings. Boomers were more likely to use the proceeds from the sale of a previous home since many were repeat buyers. Millennials were significantly more likely than Gen Xers or boomers to use funds received from parents or family or a gift.

California’s costly home prices gave nearly one in three home buyers cause to consider purchasing in another state, but buyers ultimately stayed because they liked the city or state they currently lived in or because of their job, family, or friends. Younger buyers and first-time buyers were more likely to consider leaving the state. With the state’s housing prices at 161 percent above the national average, California’s high housing costs are the biggest factor hurting young, middle-class, often minority families.

Buyers typically spent eight weeks on their home search, and nearly one in three spent 13 weeks or more. Reflecting the extremely tight housing market in the San Francisco Bay area, buyers in the Bay Area spent a median of 10 weeks in their home search. Buyers who bought homes $1 million or higher spent a median of seven weeks searching for a home, while those whose homes cost less than a $1 million spent a median of eight weeks. Generally, the more competitive the housing market is, the longer it takes to find a home.

Buyers made a median of three offers on other homes before having an offer accepted, but nearly one-fourth made more than 10 offers. Those who purchased a home for more than $1 million made five offers on other homes. The hyper-competitive, supply-constrained Bay Area had the highest incidence of multiple offers.

Buyers Preferences

Homebuyers’ preferences varied by age/generation, income, and home buyer status (first-time, repeat, investment buyer, etc.).

The typical first-time buyer purchased a three-bedroom, 1,500-square-foot, single-family home. Nearly half purchased a home in the suburbs, and two-thirds purchased a one-story home. Buying a home within their price range and with the desired number of bedrooms were the top requirements for first-time buyers. They selected their neighborhood primarily based on their budget (53 percent), safety (51 percent), and proximity to jobs/school (38 percent). First-time buyers were likely to purchase a home close to where they previously lived, with only 20 percent choosing to leave the county or state.

Being in a better financial situation, repeat buyers typically purchased a larger home with three bedrooms and a median square footage of 1,700. Three in four purchased a single-family home, and more than half purchased a one-story home. Nearly half bought a home in the suburbs, 26 percent bought a home in the city outside of downtown, 18 percent bought homes downtown, and 11 percent bought in a rural area.

With lower income and less equity under their belts, millennials tended to buy smaller, more affordable homes than older generations with a median of 1,500 square feet and a median price of $350,000. Millennials were more likely to purchase a condominium or townhome in a suburb (43 percent), followed by a home in the city outside of downtown (26 percent). They selected the neighborhood they wanted to live in based on their budget (52 percent), safety (49 percent), proximity to jobs/schools (40 percent) and family/friends (33 percent).

Similar to millennials, the Gen X group most commonly selected a home in the suburbs, trading up to a home a median of 300 square feet greater than that of their previous home. More than half of them selected a home with at least one bedroom larger than their previous residence. Most purchased a single-family home, and townhouses/condos accounted for nearly 20 percent of those purchased. The majority of Gen Xers chose to buy within the same county as they previously lived, presumably to minimize disruption from the relocation and maintain the same lifestyle.

Boomers were most likely to have purchased a single-family home in the suburbs without stairs and were also the most likely to buy a home in a rural area since many of them are approaching retirement age and planning to age in their home and seek a quieter lifestyle. They were less likely to purchase in the same county they previously resided in with 24 percent buying in another county perhaps to be closer to children/grandchildren or healthcare facilities.

C.A.R.’s 2018 State of the California Consumer Survey , conducted online between May 9 and July 9, 2018, was designed to understand the process of home buying and selling, as well as the motivation behind renting and owning from the perspective of the California consumer. Surveys were sent to 470,803 consumers ages 18 and older in the state of California, resulting in 6,144 participants, a 1.3 percent response rate. The margin of error was plus-or-minus 1.2 percent at a 95 percent confidence interval. For the buyers section, 1,441 buyers purchased a home in California within 18 months preceding survey participation.