The California Association of Realtors (C.A.R.) published the summary results of their 2006 Annual Housing Market Survey (“The State of the California Housing Market”) today. A couple of tidbits that caught our attention:

∙ Home buyers with zero-down payments increased significantly from 4.5 percent in 2000 to 21.1 percent in 2006. Two of five first-time buyers (40.9 percent) made a zero-down payment on their home purchase, while just one in 10 repeat buyers (11.3 percent) purchased their home with no down payment.
∙ The share of buyers who used a second mortgage climbed from 38 percent in 2005 to 43 percent in 2006, more than triple the percentage since 2001 and the highest percentage since 1982. The use of alternative loan products also registered a sharp increase.
∙ The typical first-time buyer had a median age of 35, earned an annual household income of $80,000, and purchased a home with a historically high median price of $450,000.
∙ The typical home seller was 50 years old, had a two-member household, earned an annual household income of $100,000, and lived in the home for five years before selling it.

C.A.R.’s “State of the California Housing Market” Summary [C.A.R.]

Comments from Plugged-In Readers

  1. Posted by etslee

    “Two out of five first-time buyers made a zero-down payment on their home purchase…”
    Unbelievable. What are they doing with their 80K salary?

  2. Posted by Dude

    C’mon…this makes it sound like the California real estate market is just a house of cards being propped up by excessive amounts of funny-money debt, provided to people who can’t afford anything under conventional terms. It used to make sense when prices were increasing rapidly….where was I going with this?

  3. Posted by Lance

    I’m actually not suprised about this at all. I know plenty of people who live in California, make more than six figures annually, and don’t have enough money for 10% down on a house. After living expenses, school loans, and rent – $80K household income in San Francisco is almost like being at the poverty line. Also, most first-time homebuyers in California get assistance from Mom and Dad. As someone who didn’t get any help from my parents, I can tell you that I had a very difficult time scrapping up the down-payment for my condo. Oh… and I make alot more than $80K/year.

  4. Posted by Phil

    Let’s see, I make 85K a year, and I manage to save around $500 a month, so to put together a 10% down payment on a $600K condo would take . . .10 years. Yep, think I’ll be renting for a while yet.

  5. Posted by etslee

    OK, maybe I’ve been listening to Suze Orman too much, but I thought if you couldn’t afford a down payment (even 5- 10%) there is no way you could afford to buy, period. People think if they can get the loan, they can afford the home.

  6. Posted by Mike Sullivan

    Etslee, I totally agree. Suze also reminds us every loan that goes into foreclosure was once approved.

  7. Posted by jennifer

    I would like to second Lance’s comment…$80k a year is laughable in San Francisco. Granted we choose to live here, but if you’re looking to buy a home, and have no other real equity behind you, it’s a bit of self-inflicted punishment. My husband and i make a lot more than $80k combined, and with a 5% down payment, we qualify for a home in the $600k range. Which gets you a 1 bdrm apartment smaller than the one we rent. Ouch. And yes, most of us who are earning $80k/year are busily trying to pay off the loans for the schooling that got us there in the first place….

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