Orange County homeowners took advantage of low interest rates and the rising value of their own properties to move up to grander houses--making move-up buyers the strongest force in the county's new-housing market in the year ending June 30, according to a study released Tuesday.
The median down payment by Orange County homeowners who could reinvest the equity of previous homes rose to a record $51,700, up from $44,000 in 1986 and $21,000 in 1985.
According to the 1987 Consumer Attitude Study, conducted by the Building Industry Research Council, all Orange County homebuyers, including first-timers, invested a median down payment of $28,600 on a new home.
Previous homeowners bought 61% of Orange County's new homes from July 1, 1986, to June 30, 1987, up from 50% the previous year and 45% in 1984-85, the study showed.
This willingness by buyers to reinvest the profits from previous homes helped boost the median purchase price of a new home in Orange County to $150,000, from $131,000 the previous year.
The building council's survey of 1,002 homebuyers in Orange, Riverside and San Bernardino counties and the northern section of San Diego County showed that the entire region's housing market, in fact, was dramatically affected by the experienced homebuyers.
In a position to be more selective, buyers have been demanding more amenities, such as family rooms, walk-in closets, breakfast nooks and three-car garages.
Homes in Orange County that were sold during the 1987 survey were much larger than those bought a year before--with an average size of 1,856 square feet, 3.03 bedrooms and 2.4 bathrooms. In Riverside County, the average was 1,801 square feet, 3.27 bedrooms and 2.3 bathrooms, while homebuyers in San Bernardino County had to settle for an average of 1,598 square feet, 3.15 bedrooms and only 2.2 bathrooms.
But after paying premium prices for bigger homes, the region's buyers were not as satisfied as previous years' homebuyers with various features of their new houses.
Complaints increasing from prior years included home size and floor plans, exterior and interior features and overall neighborhood environment. Still, in a list of 14 features, no more than 8% of the survey respondents expressed dissatisfaction with any one of those items.
The complaint most heard in the study was commuter access to jobs, with 13% of all respondents stating they were "somewhat" dissatisfied and 9% saying they were "very" dissatisfied.
Next on the list was access to shopping facilities and adequate storage in the home--each received a 17% "dissatisfaction" rating; adequacy of community recreation facilities--15% dissatisfied; and the overall quality of the home--14% dissatisfied.
"In the last three years, there has been a consistent decline in consumer satisfaction" as the percentage of move-up homebuyers has swelled, said Matthew Disston, a principal with the Research Network Ltd., a Laguna Hills marketing consulting firm that conducted the homebuyer survey for the research council.
Disston said that move-up buyers "expect a heck of a lot" from the building industry.
Another reason for the mounting consumer dissatisfaction, Disston said, may be reductions of the buyer incentives--such as landscaping and decorating allowances and lower initial interest rates--that builders have offered in the past.
In 1986-87, the survey found, just 33% of the region's homebuyers were offered incentives, contrasted with 52% the year before.
The reduction in incentives, Disston said, occurred largely because there was such a high demand for housing that builders had little need to lure customers to their projects.
In 1986, for instance, 31% of homebuyers in the survey region were offered decorator or landscape allowances, up to $4,000. But in 1987, just 16% of all buyers were offered such perks by builders, Disston said.
And builder offers of mortgage interest rate buy-downs--a financing package from the builder that includes below-market interest rates in the first several years of a loan--became almost extinct during the latest survey period, Disston said.
While 21% of homebuyers in 1984-85 got interest rate buy-downs from builders, Disston said, just 7% got them during the 1986-87 survey period.
"I would recommend that the builder consider giving a little better service," Disston said. "After yesterday (Monday's stock market crash), it will be mandatory. (Builders) will have to get back into interest rate buy-downs and they will have to attract the buyers because the buyers are going to be worried."