Included in our analysis is a survey consisting of 11 questions concerning the California residential real estate market. These questions were answered by 237 residential real estate agents located throughout California, each with at least three years experience.
The answers to the following questions will give a better understanding of the 2009 and 2010 California residential market from an agent’s perspective. Each agent was asked 11 questions regarding inventory levels, buyer activity, sales volume, foreclosures, short sales, and financing, all in relation to the California real estate market. The following data was accumulated from February 14, 2010 to February 25, 2010.
1. Are inventory levels in your market on average increasing or decreasing?
Over 60% of those surveyed agreed that inventory levels are currently decreasing, while only about 30% believe that inventory levels are increasing. The current market is demand-driven, and is therefore absorbing much of the supply (inventory levels).
2. To what extent has buyer activity increased or decreased over the past year?
Over 79% of those surveyed agreed that buyer activity has increased over the past year. On average, prices for a single family residence decreased dramatically, leading to an increase in buyer activity and an increase in demand.
3. What do you expect will happen to buyer activity in 2010?
Over 60% of those surveyed believe that buyer activity will continue to increase throughout 2010. The sustained increase in demand (buyer activity) can be attributed to the continuation of low prices as well as the buyer tax credit.
4. What do you expect will happen to sales volume when the buyer tax credit expires in April?
Over 70% of those surveyed believe that sales volume will decrease now that the tax credit has expired. The current tax credit includes up to $8,000 in government assistance for qualified first-time home buyers purchasing a principal residence, and up to $6,500 in government assistance for qualified repeat home buyers.
5. What proportion of buyers in your market are owner-occupants, not investors/landlords?
Over 75% of those surveyed believe that buyers are owner-occupants as opposed to investors or landlords. To some degree this is due to the current mortgage incentives given to owner occupant residencies.
6. Is favorable financing for purchases readily available?
Over 75% of those surveyed agree that favorable financing is either somewhat or readily available. Although lenders have become more stringent concerning lending and FICO scores, historical trends confirm that financing has become easier to obtain.
7. Have foreclosures in your market increased or decreased since early 2009?
Foreclosures vary typically by market. Although there is an increase in default payments, the variations in foreclosures can be attributed to the increase in loss mitigation efforts (short sales, loan modifications), which have helped many homeowners find ways to avoid foreclosures.
8. Have short sales in your market increased or decreased since early 2009?
Over 80% of those surveyed believe that short sales have increased since early 2009. The downturn in the California residential market has led many homeowners to seek assistance in the form of loss mitigation, in an effort to avoid foreclosures.
9. In your opinion, what effect have short sales and foreclosures had on home values during 2009?
Over 86% of those surveyed believe that 2009 home values were negatively affected by short sales and foreclosures. Due to homeowner debt and a lender’s willingness to rid itself of a property in default, many short sales are typically priced below fair market value, leading to a negative effect on home values.
10. In your opinion, what will be the future effects of foreclosures and short sales on home values?
75% of those surveyed believe that short sales and foreclosures will still have some effect on home values in the future. Therefore, a majority of the agents surveyed believe that home values will continue to decrease.
11. In your opinion, what will be true of housing values in 2010?
There is disparity concerning housing values in 2010. Over 44% of those surveyed believe that housing values will decrease in 2010. This can be attributed to the continuation of short sales and foreclosure, which lower housing values.
Published with permission from "A STATE IN TURMOIL: Why The California Residential Real Estate Market Has Just Begun To Fall" By Eli Tene, Gil Priel and Jeff Woodsworth. This text may not be redistributed or reproduced without the written consent of its authors.
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