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Bob Khalsa: Optimism running high on housing recovery

Posted: January 3, 2013 2:00 a.m.
Updated: January 3, 2013 2:00 a.m.
 

As the new year gets underway, a recent survey of California homebuyers has found optimism about the housing market on the rise with three out of every four buyers confident prices will increase over the coming decade.

While it’s based merely on my own gut feeling, the statewide sentiment is even strong right here in the Santa Clarita Valley.

Here’s what the “2012 Survey of California Homebuyers” by the California Association of Realtors found:

• Twenty-five percent of the respondents said they believe prices will rise in one year.

• Another 41 percent said it would take five years for prices to rise.

• While 73 percent of buyers said prices would rise in 10 years.

That’s a dramatic improvement from three years ago when the same question yielded much lower percentages: 8 percent, 35 percent, and 60 percent, respectively.

The survey also found that the mortgage interest deduction is extremely important to homebuyers across all income levels and age groups, with 79 percent of all homebuyers saying that the mortgage interest and property tax deductions were “extremely important” in their decision to buy a home. That’s particularly noteworthy as lawmakers in the nation’s capitol consider limiting or perhaps even eliminating the deduction, a move that I believe would inflict severe damage on the budding housing recovery while sending the economy into turmoil.

When broken out by income, the findings were similar across all income levels, with 80 percent of those earning less than $100,000 annually, 78 percent earning between $100,000 and $199,999, and 81 percent earning more than $200,000 annually saying the deductions were “extremely important” in their buying decision.

Likewise, when broken out by age group, the interest deductions were equally important to Generation Y, Generation X, and baby boomers, with 76 percent, 82 percent, and 80 percent indicating the mortgage interest and property tax deductions were “extremely important” when deciding to buy a home.

“The mortgage interest deduction plays an important role in buyers’ monthly budgeting,” said Don Faught C.A.R. president. “Without this tax advantage, housing affordability would be negatively impacted and potentially price out many would-be buyers.”

None of the buyers questioned expected prices to drop in the near future, while 45 percent cited today’s low prices as the chief reason they purchased a home.

Assuming Congress resolves to support the housing recovery, or at least leave it alone, 2013 promises to be a pretty good year and, for that, we are grateful.

Bob Khalsa is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

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