Move-up buyers make a comeback
Clive and Cytree Berman planned to spend about five years living in the 1,200-square-foot Las Flores townhome they bought in 2003.
Then, the market crashed, and it took 10 years for their home’s value to return to what they paid. During that time, Clive Berman said, their three-bedroom unit “got very small” as the couple had a son and adopted two cats and a large yellow Lab.
Who’s buying homes in California?
- 53: Percent that are female
- 38: Average age
- 61: Percent that are college educated
- 63: Percent that earned $100,000 or more a year
- 33: Percent that earned more than $150,000 a year
- 50: Percent that owned their previous home
- 38: Percent renters
“We felt trapped in a home and wondered if we’d ever get out,” Clive Berman said. “We’re fortunate to be able to move up.”
The Bermans are among 18,000 households that bought an Orange County home this year. In many ways, they’re typical of today’s homebuyers.
With the economy improving, prices rising and fewer homeowners “under water,” move-up buyers are returning to the market.
Irvine agent Mac Mackenzie, who sells homes across Orange County, said the shoppers he sees primarily are in their 30s or 40s.
“It’s families, all families,” Mackenzie said. “(It’s) Ma and Pa Kettle trying to get their family a home to grow into.”
A state Realtor survey of all California homebuyers from late 2012 and early 2013 showed that half owned a home prior to their purchase; 38 percent were renters.
The typical California buyer also was female and married. Whites accounted for 37 percent of buyers, Asians 28 percent and Latinos 26 percent. The average age was 38. Nearly two-thirds have a college degree and earn more than $100,000 a year.
Orange County families are buying again, agents say, based on needs such as growing or shrinking households and their desire for better schools or neighborhoods.
Jeff Culbertson, Coldwell Banker’s executive vice president for Southern California, said agents are seeing a lot of move-up buyers, and a lot of buyers down-sizing as well.
“It’s more of a traditional market where family needs and family transitions affect the market,” Culbertson said.
Investors, while in the minority, still have a major impact.
Figures from DataQuick Information Systems show that a fourth of this year’s sales were to absentee buyers – most of them likely investors. Thirty-two percent of Orange County purchases were all-cash sales. Both absentee and cash buying hit record levels this year.
Many investors are from overseas. The National Association of Realtors estimated last month that foreign buyers accounted for 6 percent of the amount spent buying U.S. homes in the year ending in March. California accounted for 17 percent of the nation’s foreign buyers.
“You’ve had a large group of investors buying and paying cash, and you’re seeing a lot of foreign money,” Culbertson said.
“It surprised all of us that there was that much cash out there,” he said.
Jeff and Jenny Gahagan bought their Ladera Ranch home from an investor after outgrowing their condo in Aliso Viejo.
They acquired the condo and a golden retriever three years ago, and now have a 1-year-old daughter as well.
On April 26, they bought a two-story, four-bedroom house with 2,400 square feet at the end of a cul-de-sac.
The home has a fire pit and an outdoor kitchen out back.
“We wanted a family and a house we can grow into with a better yard,” said Jeff Gahagan, 35, a commercial real estate agent. “We like to entertain and have enough room to have friends over. Also, we wanted to walk to school, walk to parks. Ladera is a great community for young families.”
Like the Gahagans, Cody and Karen Hicks needed more space.
Their carriage unit in Wagon Wheel, just outside Cota de Caza, was perfect when they got married. But they outgrew the 950-square-foot unit after having a baby daughter and getting an 80-pound golden retriever-poodle mix. The couple sold their condo on July 12 and bought a townhome on the same day, moving into their new unit last weekend.
They had been waiting for their old unit’s prices to go high enough to provide them a down payment on a new place, said Cody Hicks, a Western regional sales manager for a lighting manufacturer.
Their new townhome in Ladera Ranch has two stories, three bedrooms and almost twice as much room as they had in their old condo, plus a two-car garage.
Clive and Cytree Berman thought their Las Flores townhome was a palace when they moved in a decade ago.
That changed, however, after their son, Carson, was born. Soon, the couple adopted two cats – Bruce and Liberty – and Missy the dog.
“We wanted a bigger house,” Clive Berman said. “We always joked, ‘This place is so small, you have to go outside just to change your mind.’ ”
When the market crashed, their home’s value fell below what they owed on the mortgage.
But they feared that the damage a short sale would do to their credit score might prevent them from getting another house. So they waited.
This year, they were able to sell their townhome in just three days – for $10,000 over the asking price.
The Bermans ended up buying a home that investors had purchased at a foreclosure sale for $122,400 less three months earlier.
“We just wanted to have enough room so family could come and stay at our house and to host Thanksgiving,” Clive said. “Now we couldn’t imagine living anywhere else. The house found us.”