As home prices steadily trend upward while mortgage rates continue to reach record low levels, more sellers want to take advantage of the low borrowing cost and plan to repurchase another home. After six years of decline since 2005, sellers who planned on buying or had already bought another home rose for the second consecutive year in 2012, according to C.A.R. 2012 Annual Housing Market Survey. Two of five (40 percent) home sellers planned to repurchase as the housing market started its slow recovery, an increase from 38 percent in 2011.
Nearly half of those sellers who planned to repurchase said that their new home would be located within the same county, a significant increase from 38 percent reported in 2005 - the peak year of the recent housing market cycle. Meanwhile, about one-fifth of sellers who planned to purchase a new home decided to buy in another state outside of California, a drop from 31 percent in 2005 when the median price was over $500,000.
Higher housing affordability in recent years was probably a big factor in the surge in more sellers wanting to stay within the same county and the steep decline in sellers wanting to move to another state. Since 2005, the statewide median price has declined 39 percent from $522,670 to $319,340 in 2012, while the average 30-year fixed rate mortgage dropped from 5.87 percent to 3.66 percent. The decreases in interest rates and home prices pushed the California housing affordability index up from 15 percent in the third quarter of 2005 to 49 percent in the same quarter of 2012, making homeowners less inclined to move because of affordability.