June 2016 H OUSING N EWS R EPORT
“They teamed up and bought it together. Neither could afford to buy on their own,” he said, adding that they only ended up putting $600 down each thanks to a down payment assistance program for first-time homebuyers. That type of purchase is becoming more common in Sacramento and nationwide, according to a RealtyTrac analysis of buyer name data, which shows that 195 single family home and condo purchases in May 2016 in the city of Sacramento had multiple, non-married buyers on the sales deed. These “sharing buyers” represented 17.4 percent of all home purchases for the month, up from 150 sharing buyers in May 2015 representing 14.4 percent of all home purchases in the city of Sacramento. Nationwide, 15.8 percent of all home purchases in May 2016 were to sharing homebuyers, up from 9.9 percent in May 2015, according to the RealtyTrac analysis. Cities with the highest share of sharing homebuyers in May 2016 were San Jose, California (44.2 percent), San Francisco, California (40.2 percent), and Seattle, Washington (33.8 percent). Because Gove’s son, 21, and daughter, 23, purchased at good price of $235,000, Gove estimated they each are starting with about $30,000 in equity and a low monthly house payment that is more than covered by rent if they decide to rent the property. “I don’t care if the market goes to hell in a handbasket, they are still cash flowing,” he said. “It’s always a good time to be buying if you can buy at the right price.”
put 20 percent down lost their homes to short sale or foreclosure. The three who put no money down they were gone so quick.” While no down payment loans are less common in the 2016 Sacramento housing market than they were 10 years ago, there was a surge in the share of buyers using Federal Housing Administration Loans — typically low down payment loans where the buyer is putting down 3.5 percent — in 2015, according to RealtyTrac data. The share of FHA buyers was as high as 26.2 percent of all buyers in Sacramento County in the second quarter of 2015, the highest level in more than three years, since the fourth quarter of 2011. Meanwhile FHA buyers represented 16.4 percent of all buyers nationwide in the second quarter of 2016. While the FHA buyer share in Sacramento County dropped back down to 21.8 percent in the first quarter of 2016, Lundquist noted FHA buyers are often submitting the highest offer in a multiple offer situations, according to feedback he’s hearing from agents. “When I ask agents where offers are coming in at, almost always the highest offer is FHA. And I think that tells us something,” he said, noting that because of lower FHA insurance premiums implemented in January 2015, buyers who might otherwise opt for a conventional loan are opting for an FHA loan instead. Lundquist added that FHA buyers tend to submit higher offers in part because of the low down payment associated with most FHA loans. “Buyers putting less ‘skin in the game’ tend to offer more because there is less immediate financial pain by seeing a larger down payment leave a bank account,” he explained. “Moreover, prices ripe for FHA buyers tend to have less inventory anyway, so it makes it even more competitive. On top of this, since FHA property standards tend to be more strict, the idea is a higher offer might entice a seller to accept an FHA offer despite the perception of the loan being more strict.”
Millennials Teaming Up to Buy
Two buyers who recently purchased a Sacramento-area property with a low down payment loan were the son and daughter of Gove, the radio show host.
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