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Are First-Time California Home Buyers Pushed Out of the Market?

by The Domis Team

A new article in the Los Angeles Times evidences an unfortunate trend in the housing market: fewer first-time home buyers. The combination of tough mortgage underwriting standards and competition from cash buyers seems to be putting the squeeze on first-time home buyers in California and around the country.

Here are some highlights from the article, along with our own thoughts on the matter!

According to data from the National Association of Realtors, first-time home buyers typically represent about 40% of home sales. But between 2008 and 2012, they’ve accounted for fewer transactions, representing about 30% to 35% of the market. The result? 2.2. million fewer home buyers over a four-year period.

In the past 3 months, first-time home buyers have accounted for only 30% of the market, even while mortgage interest rates have remained at historic lows. This would suggest that reduced home inventories are also taking away home ownership opportunities from first-time buyers, who are often competing with cash buyers who are buying homes for investment purposes.

One challenge for first-time home buyers is qualifying for a mortgage while their debt-to-income ratios exceed 43%. The common culprit is student loan debt, which has become a growing burden on would-be home buyers. A Pew Research study shows an average student debt balance of $26,682. More than 1 in 10 graduates have nearly $62,000 in student loan debt. These figures have increased sharply in recent years.

FHA mortgages remain the best, and perhaps only option for first-time home buyers, but increased mortgage premiums have made them more expensive than in prior years. This also affects the debt-to-income ratio as mortgage insurance premiums are considered in the picture.

What can first-time home buyers do? Here are some suggestions:

  1. If you have more than one student loan, consolidate them. This can help lower your overall interest expense and improve your cash flow.
  2. It will take years to pay off your student loans, so keep your other debts at an absolute minimum. Car payments, cell phone contracts, and credit cards payments can easily add up to far more than your student loan payment. Control what you can!
  3. If you need time to catch up on other expenses, ask for a forbearance on your student loan. This means you can stop making payments, with permission, for a specified period of time without penalty.

Buying a home may be a bit tougher for first-time home buyers, but it is not impossible! When you need home buying help, let the Domis Team be your guide to Whittier real estate! We will be happy to refer you to a reputable mortgage lender and give you the inside scoop on the local market!

Contact us for friendly, professional service!

The Domis Team
Prudential California Realty
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Home Buyers Bounce Back After California Foreclosures

by The Domis Team

You've heard of first-time home buyers and move-up home buyers, but there's another group making an impact in the California housing market: the boomerang home buyers!

Boomerang buyers are an emerging force in our real estate markets. By definition, these are previous homeowners who experienced a short sale or foreclosure during the housing decline, who have now met the minimum waiting period to obtain a new FHA mortgage. As we mentioned in a prior blog post, FHA mortgages are the most forgiving when it comes to prior credit blemishes.

A recent article in the Orange County Register puts some numbers behind boomerang buyers. In Orange County alone, some 33,000 former homeowners who experienced foreclosure have now met the waiting period requirement for an FHA mortgage. The Register reports that these buyers have been trickling back into the greater Los Angeles real estate market for the past year.

Nationally, as many as 3.4 million boomerang buyers have met the FHA mortgage waiting-period requirements.

Of course, not all of these buyers are financially ready to qualify for a mortgage. Per the Register, those who met other debt obligations on time, and whose only credit blemish was a foreclosure or short sale, generally have better credit scores. Former homeowners who experienced major financial distress and missed payments on debts across the board, have farther to go to repair their credit.

As rental costs heat up, boomerang buyers will have more incentive to return to home ownership. The strengthening economy and improved employment environment has also boosted buyer morale.

This is more good news for Whittier home sellers, who are already looking forward to brisk buyer competition for the limited number of homes we have on the market!

For first-time home buyers, it's further evidence that using professional guidance in our fast-changing market is essential!

As your Whittier real estate professionals we are always ready to assist you with your questions about the Whittier real estate market! From the latest home sales statistics to the newest listings, turn to the Domis Team for the best in local expertise!

For friendly, professional assistance, contact us today!

The Domis Team
Prudential California Realty
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Credit Report Errors Can Complicate Home Buying

by The Domis Team

According to a report by the Federal Trade Commission, up to 1 in 4 consumer credit reports contain some amount of erroneous information.

These errors may involve minor spelling mistakes in names or address, or can be more serious in nature and affect your credit score.

Errors in personal information can also be indications of credit fraud. Innocent mistakes happen when names and Social Security numbers are similar; but sometimes the coincidences are not by random chance. The FTC reports that over 9 million people have become victims of credit fraud.

Naturally, you don't want to wait until you're buying a home to discover there's a problem with your credit report. Too often, credit report errors go unnoticed and unreported until a loan denial occurs! You can avoid problems with your mortgage application by checking your credit history and addressing any errors before you apply for a mortgage. Here's what to do:

1. Get your free credit report from annualcreditreport.com.

2. Examine your report for accuracy in your personal data as well as payment record.

3. Circle any errors found on your report.

4. Prepare to back up your case with proof of payments or other supportive data.

5. File a dispute with the credit bureau that supplied the report.You can file online, or send a written dispute in the mail. Make sure your dispute is concise and contains all pertinent facts. If sending by mail, include a copy of the report with the errors clearly circled.

6. Allow up to 30 days for a response. If the bureau rules in your favor, they will supply you with a copy of your new, corrected report.

Not all credit errors affect your score, but enough of them do that it's well worth your time to stay on top of your credit report! Also remember that  mortgage lenders are extra-picky these days, and a clean credit report is worth its weight in gold!

Need home buying help? Let the Domis Team be your guide to Whittier real estate! We will be happy to refer you to a reputable mortgage lender and give you the inside scoop on the local market! Contact us for friendly, professional service!

The Domis Team
Prudential California Realty
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Los Angeles County Home Sales Post Gains in December

by The Domis Team

Whittier home sellers who are hoping for more good news may not have long to wait! According to the California Association of Realtors, California home sales posted gains in home prices during December 2012. 

The median price of a California home increased to $366,930 in December, up 5% from November and an increase of 27% from December 2011.

The big story in California real estate is the shrinking home supply. The unsold inventory index slipped to 2.6% in December.  This is a further decline from the November index of 3.1%. A year ago, the index stood at 4.3%

We’re using a lot of numbers to tell you that California’s home selection is low and prices are rising! Let’s zero in closer to home and look at the Los Angeles Metro. Average prices here are near the state average, with December’s median home price standing at $333,140. This is a 1.6% price increase from November, and a 25.3% increase from a year ago!

If we widen the net just a bit, Los Angeles County shows average home prices of $367,400 as of December 2012, an increase of 9.0% from November and an increase of 19.7% from a year ago.

Orange County has a much higher median home price of $582, 930. This price reflects a gain of 3.2% from November and 20.3% from a year ago.

There is a note of caution in these figures. Sales of homes priced above $500,000 were unusually strong towards the end of 2012, as affluent home sellers rushed to sell before any “fiscal cliff” tax impacts. This could have driven up the averages and provided an unseasonal boost to home activity. Then again, California has caught the eye of institutional land investors, and real estate is once again trading strong on Wall Street.  It would be unrealistic to expect a moon landing when it comes to 2013 home prices, but we won’t be skating along the bottom either.

How is the market in Whittier?  Take a look at our featured listings and you’ll see the story for yourself! Homes priced below $500,000 are scarce, and we are selling, selling, selling! In fact, we need more listings for our first-time home buyers and our move-up buyers!

If you are a Whittier homeowner who is thinking of selling, consider the opportunities you have in the market today!  You have little competition and plenty of motivated buyers. Why not get a free comparative market analysis and see what your home could do on the market? You might be pleasantly surprised!

When you are selling a home, get the local expertise you can trust.  Let the Domis Team show you how we obtain top dollar for your home! Whether you need information about your current home value, or you just have a few questions, we’ll be here to help you! Contact us today!

The Domis Team
Prudential California Realty
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Photo of Linda & Ryan Domis - The Domis Team Real Estate
Linda & Ryan Domis - The Domis Team
Keller Williams Realty
16310 E. Whittier Blvd. Suite F
Whittier CA 90603
Cell: 562-884-5373
Cell:562-458-6947
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