DQNews Archived Article

Low Down Payment Home Buying in California

by Real Estate Analyst John Karevoll
December, 2000

La Jolla, CA.— The number of California home purchases made with low down payments, usually by first-time buyers, is declining, a real estate information service reported.

During the July-to-September period, a total of 34,359 home buyers purchased their home with a down payment of five percent of the purchase price or less. That was down 6.1 percent from 36,586 for the second quarter, and down 18.0 percent from 41,908 for last year's third quarter, according to DataQuick Information Systems.

The year-ago number was the second highest on record, slightly behind 42,943 for second-quarter 1999. The number of low-down buyers more than tripled from 1990 to 1999, far outstripping California's overall increase in home sales.

"The easiest conclusion to reach here is that rising prices are pushing entry-level buyers out of the market. But the picture is more complicated than that. Today's market is actually pretty good for entry-level buyers," said Mike Ela, DataQuick's president.

One reason is that prices in entry-level neighborhoods have not increased as much as prices in mid- and up-market areas. The median price paid for a low-down home was $142,000 last quarter, up 5.2 percent from $135,000 for third-quarter 1999. The statewide median for all homes was $210,000 last quarter, up 11.1 percent from $189,000 a year ago.

"While price levels get a lot of attention, it's actually the size of the mortgage payment that makes or breaks most home purchases. Willing lenders and reasonable interest rates make the borrowing environment pretty good right now," Ela said.

The median mortgage payment for low-down purchases last quarter was $1,019. That was down from $1,037 for the previous quarter, and up from $947 for 1999's third quarter. Ten years ago, in third-quarter 1990, it was $1,008.

The most active lenders in the low down payment category are North American Mortgage, Countrywide Home Loans and Bank of America.

DataQuick, a business unit of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The year-over-year decline in low-down payment purchases was steepest in the Bay Area at 35.7 percent, from 4,406 to 2,835. In Southern California the decline was down 17.7 percent, from 26,838 to 22,079. In the Central Valley it was 10.9 percent, from 9,074 to 8,086.

Buyers in this category are most active in the counties of counties Kern, San Bernardino and Yuba. They are least active in Marin, San Francisco and Santa Clara, DataQuick reported.

Places with the highest rate of five percent or less down payment purchase activity:

Place	Zip code	Low down payment%	Median price
Ontario	91764	68.5%	$130,000
Lynwood	90262	68.5%	$140,000
Paramount	90723	68.5%	$118,000
Perris	92571	68.3%	$98,000
Pacoima	91331	68.1%	$148,000
Delano	93215	68.1%	$89,000
South Gate	90280	67.5%	$150,000
Whittier	90606	67.5%	$166,000
Victorville	92394	67.1%	$96,500
National City	92139	66.1%	$147,000
Commerce	90063	66.1%	$134,000
Santa Ana	92707	66.0%	$168,295
Long Beach	90805	65.4%	$145,000
Rialto	92376	64.6%	$108,500
Fontana	92335	64.6%	$107,000
Pico Rivera	90660	64.5%	$158,000
Huntington Park	90255	64.5%	$151,000
Fontana	92337	64.4%	$132,000
Montclair	91763	63.8%	$139,000
Moreno Valley	92551	63.7%	$107,000
...
Oakland	94621	44.3%	$135,000
Oakland	94603	42.4%	$143,750
Pittsburg	94565	42.1%	$158,000
Richmond	94801	40.8%	$135,000
Oakley	94561	39.3%	$190,000

Source: DataQuick Information Systems

Media Inquiries: John Karevoll (909)867-9534

Copyright © 2000 DataQuick Information Systems.
All rights reserved.

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