March 12th, 2010 2:45 PM by Lehel S.
GLENDORA - This week has been a busy one for Jason Espinosa, as the 37-year-old beverage company manager gears up to move into his first home.
"I've worked all my life and mostly been pretty loose with my cash funds, but as I got older, I accumulated some savings, so I thought it was a good time to buy a piece of property," he said. "With tax credits and money saved, it sounded like a good time."
Espinosa, who just closed escrow on a $400,000 Spanish-style home in Glendora, isn't the only one thinking that way.
The California Association of Realtors reported Wednesday that nearly half of all homebuyers in the state last year were first-time homebuyers. That's the highest share since 1995 when more than half of all buyers were first-timers.
Last year, buyers grabbed hold of an $8,000 first-time-buyer federal tax credit, historically low interest rates and a glut of foreclosures and bank-owned properties to find homes that on average sold for $20,958 less than the original asking price last year, according to CAR.
Locally, "it might even be over 50 percent," said Marty Rodriguez, a Glendora Realtor. "Prices have come down low enough that it makes almost as much sense as renting. People are looking for the $8,000 tax credit, which is defraying their cost of buying."
Indeed, nearly 40 percent of buyers said they would not have bought their home if not for the federal incentive.
That has equated to a changed
More than 60 percent of homes (on the market) in Whittier and surrounding areas are short sales - where buyers are forced to sell for less than what the home is worth, said Chris Vigil, a Whittier Realtor.
"The market is saturated with first-time homebuyers," he said, adding that Realtors who work hard are are seeing high numbers of clients.
Much of the time - at least in the Whittier area - prices are so low that the federal tax credits aren't even at the top of the list of reasons to buy.
"I'm talking to buyers who aren't even mentioning the credit," Vigil said.
Still, the credit is vital in some areas, where first-time buyers may not have as much ready cash to afford a traditional downpayment, Realtors said.
Rodriguez is concerned that if Congress does not extend the tax credit before it ends in April, it may chill buyer demand. That demand has fueled rising home prices in recent months after the market tanked at the beginning of a now two-year-old recession.
She likened it to the government's Cash for Clunkers program, which spurred demand for a short time, only to see it tank in the months following.
"The buyers weren't their anymore," she said. "What are they going to do to keep those buyers buying?"
It's important to keep home buyer demand going, she said, because it fuels not only construction but a range of businesses, from home repair to furniture.
"(First-time homebuyers) start to buy things that move the economy. If you don't have that movement, you're not propelling other industries," Rodriguez said.
While first-time buyers are dominating the market, their frenzy has created a double-edged sword, according to the report.
One-third of sellers sold at a cash loss last year., the highest level on record since CAR started to track losses in 1989.
Still, the other edge of the sword remains a boon for buyers. The median price of distressed properties fell nearly a quarter to $250,000 last year, CAR reported.
And while Espinosa had initially hoped for something a little less than what he paid, the opportunity was too good to miss.
"At the end of the day, I'm happy," he said. "It gives me the incentive to do better at work and do better in my life."