The California Association of REALTORS® (C.A.R.) recently published a consumer survey, which reveals useful insights about how potential home buyers in California perceive the current housing market, and what challenges they face with regard to owning a home.
According to the survey, one in two California renters rate homeownership as extremely important or very important, and nearly 80 percent of renters aspire to own a home someday.
Homeownership continues to be a major goal for most despite the current affordability challenges. Many renters see inherent benefits in owning a home, which go beyond just having a roof over their heads. One in five renters believes that buying a home is a prudent investment in the long run, while a similar number of renters feel that homeownership gives them a free hand to do what they want with their home. About 12 percent of renters perceive that having own home provides greater stability and roots to the owner and their family. Renters in California typically spend 45 percent of their income on housing, and almost seven in 10 spend more than the recommended 30 percent. Rent burden is particularly high for the Millennials, who spend half of their income on rent.
C.A.R.’s 2018 State of the California Consumer Survey also revealed valuable insights about the opportunities and challenges for actual home buyers in the state. Many home buyers in California are making compromises with regard to the cost, size, location, and quality of schools while purchasing a home.
Due to the low affordability of homes, 44 percent of the buyers surveyed said that they had purchased a more expensive home that they would have liked to. About one-third bought a smaller home than they wanted, and 36 percent bought a home in a location further from school or workplace than they wished. According to 2019 C.A.R. President Jared Martin, home buyers in California recognize the realities of a competitive housing market, and accept that they may not be able to purchase the ideal home. Therefore, they are looking for a home that is a good enough fit for them rather than a perfect fit.
Home buyers have some good news coming from the Federal Housing Administration (FHA). The FHA has increased its 2019 loan limits in most areas across the country. No jurisdiction will face a reduction in loan limits from 2018 levels. For lower-cost areas, the loan limit will now be $314,827, while in high-cost areas the limit will be $726,525. This creates a slightly better opportunity for home buyers in California to afford the home of their dreams in 2019.