California home buyers are more optimistic about the housing market now than they were three years ago, but getting approved for a home mortgage continues to be a difficult process, according to a survey released Tuesday from the California Association of Realtors.
Buyers were asked about their thoughts on home prices, about the importance of tax deductions and their financing difficulties when buying a home.
With home prices already showing some improvement this year, buyers believe prices will continue to increase by 25% in a year and 41% in the next five years, the survey said.
That compares to an increase of only 8% and 35%, respectively, when the survey was conducted in 2009, the association said.
About 79% of the buyers surveyed said that the mortgage interest deduction and property tax deductions were “extremely important” factors in their decision to buy a home this year.
“The mortgage interest deduction plays an important role in buyers’ monthly budgeting,” said the association’s newly appointed president Don Faught, a broker from San Francisco. “Without this tax advantage, housing affordability would be negatively impacted and potentially price out many would-be buyers.”
While the market looks to be improving, buyers say it’s still difficult to get approved for a home mortgage loan.
On a scale of one to 10, with 10 being extremely difficult, buyers rated their difficulty obtaining a mortgage at 8.5, up from 8 last year, the report said.
Those who are getting approved for loans are putting higher down payments on their homes these days. Buyers are putting an average of 25% down on their homes, more than the traditional 20% or the Federal Housing Administration minimum of 3.5%, which is often used by first-time home buyers.
The report was conducted by telephone and included interviews with 800 people statewide to measure their perceptions of the home buying process. Those who responded all closed escrow on their new homes between February and August.