Indicating an improving housing market, California home buyers are more optimistic than they were three years ago about prospects for rising home values, according to survey results reported Tuesday by the California Association of Realtors.
More home buyers this year believe that home prices will rise, with 25 percent saying they will rise in one year, 41 percent in five years, and 73 percent believing home prices will rise in 10 years. This compares to 8 percent, 35 percent, and 60 percent, respectively, in 2009, when the question was first asked, according to the 2012 Survey of California Home Buyers.
This year, none of the home buyers surveyed felt that prices would drop in the future, which echoes a jump in the consumer confidence index from 37.38 in January 2009 to 73.7 in November 2012, CAR reported.
The survey, which was conducted by telephone, polled 800 people statewide to measure their perceptions of the home buying process. Eligible respondents all closed escrow on their new homes within the six months prior to August 2012, according to CAR.
The survey found that the mortgage interest deduction is extremely important to home buyers across all income levels and age groups, with 79 percent of home buyers saying the mortgage interest and property tax deductions are "extremely important" in their decision to purchase a home.
"It's clear that home buyers at all income levels and ages value the tax deductions associated with purchasing a home," said CAR President Don Faught, whose organization, headquartered in Los Angeles, represents 155,000 real estate professionals around the state.
"The mortgage interest deduction plays an important role in buyers' monthly budgeting. Without this tax advantage, housing affordability would be negatively impacted and potentially price out many would-be buyers."
The statement appeared to reflect fears that negotiators discussing increasing revenues as part of the talks on avoiding the so-called fiscal cliff might take aim at the deductions.
Other survey findings reported by CAR in a statement:
-- In a sign of tighter lending standards, buyers experienced "extreme challenges in obtaining financing." On a scale of one to 10, with 10 being extremely difficult, buyers rated their challenge in obtaining financing at 8.5 on average, up from 8.0 in 2011;
-- Higher down payments are now the norm, with buyers putting an average of 25 percent down on their home purchase. The average down payment has been higher than the traditional 20 percent since 2009, when the question was first asked;
-- Ninety-three percent of buyers obtained a fixed-rate loan, up from 84 percent in 2011, reflecting buyers' need for certainty.