First Time Homebuyers Will Pay a Bit More

The housing market collapse has been great for part of the population in the US, which are the first time home buyers. Prices were low, mortgage rates were very low, and around 58% of families in the San Diego County area can afford to purchase an entry level home as stated by the California Association of Realtors. 

This figure is just a tad down from the high that was seen during the first quarter of 2009, which at that time was at 60%, but it is still a long way from the affordable lows seen during the housing bubble. As an example, the second quarter of 2006, the California Association of Realtors only reported 23% of San Diego families could afford an entry level home.

According to the U.S. Census Bureau in 2009, homeownership rate in San Diego was 56.4%.

The California Association of Realtors using specific ways to calculate the affordability for entry level homes. One way is that a first time home buyer will buy a home that is 85% of the median price found in an area, they will use an adjustable loan, and will have 10% to put down on the home. Adjustable rate loans are not as popular since the housing market began to falter. Leslie Appleton-Young of CAR’s chief economist stated that this group is still using adjustable rates, as it is the easiest way to measure home affordability rates over a period of time.

Throughout California, the California Association of Realtors predicts that 67% of all families could afford an entry level home that is $266.750. The monthly estimated payment, which includes insurance and taxes, would be $1,470, meaning a family needs to have an income of $43,960 annually.

Appleton-Young stated, “One of the most interesting things is that U.S. affordability is slightly below California,” and went on to say,” That’s a first.”

The minimum annual household income in San Diego County would be $62,260 in order to afford an entry level-home of $377,730 with  monthly payments of $2,080. When it comes to affordable entry level homes, San Diego County is in the middle to other California regions. San Luis Obispo County region is estimated to be the least affordable with just 48% of households being able to afford an entry-level home, next comes the San Francisco Bay area at 49%. The most affordable regions for first-time homebuyers include High Desert with an 84% and Sacramento County at 80% affordability rate.

Overall, San Diego affordability is low in comparison with 37% of families able to afford a home with the median price of $392,620 explained, Appleton-Young.

The California Building Industry Association released a study stating 44% of families in the San Diego metro area during the second quarter of 2010 could afford a home. New York City was the top for least affordability, next was the San Francisco Bay area, and San Luis Obsipo.

Court Decisions Favor Realtors

Court Decisions Favor Realtors

In the news this week are two California court cases in which a real estate broker received due compensation under the California Association of Realtors buyer/broker agreement and the other case in which an attorney was penalized for asserting frivolous accusations against a broker.

Schaffter versus Creative Capital Leasing Group is the first case. In this case, the buyer in 2002 signed a CAR buyer broker agreement in which the buyer agreed to compensate the broker for contracts for the purchase of 16 new units in condo developments. The buyer closed on eight of the transactions, however, went into default on the other eight contracts. The broker was not given his compensation when the buyer and seller agreed to return the deposits back to the buyer except for $1,000.

The broker sued the buyer for all unpaid compensation for all of the 16 transactions. In this case, CAR submitted an amicus curiae or “friend of the court” briefs to support the broker’s position in the case. The buyer on the other hand used the agreement he had with the seller to prove his case explaining the transaction to default on eight of the contracts was done between buyer and seller, thus no compensation was due the broker. The court, however, disagreed with the buyer and agreed with the CAR agreement and stated, “As CAR explains in its amicus brief, the ‘default’ provision of the Buyer Broker Contract recognizes that when a buyer defaults under a purchase agreement, it would not be fair to deny the broker the right to be paid for services rendered under the Buyer Broker Contract.  “The seller’s post-default conduct is, of course, immaterial to determining whether the buyer defaulted.”  The court awarded the broker the compensation for all 16 contracts along with all attorney and court costs.

The next case was Fields versus Sycamore Ventures. This court case centered on a buyer that after buying a new home found mold and leaky pipes. The buyer upon finding this discovery filed a lawsuit against the broker with 18 legal claims. The majority of the claims against the broker such as breach of warranty, nuisance, and trespass were without merit. The court agreed the claims were unwarranted and awarded the broker $13,500. The court will send their decision to the State Bar of California to decide if disciplinary actions are warranted against the attorney for the buyer, Miller Law.