Challenges face first-time home buyers in Sonoma County

Steven Schindler was taken aback last spring when his real estate agent told him to prepare to visit 30 to 40 homes in order to purchase one.

'I just laughed,' said Schindler, 35, a plumber and first-time buyer. He told himself there was no way his wife, Allison, and he would need to view that many homes.

It turns out the couple did look at more than 40 homes as they sought one priced between $500,000 and $550,000. In September they completed the purchase of a four-bedroom home in east Petaluma, the town where Allison grew up.

The Schindlers are pleased that they persevered, and they advise other first-time seekers against getting discouraged if house hunting takes longer than expected.

'It's a really tough market out there,' said Allison Schindler, 32, who works in retail.

The number of first-time buyers has markedly declined over the past six years as home prices rebounded from a historic market crash.

Today, only a quarter of Sonoma County households can afford the median-priced home. As a result, owning a home seems especially out of reach for many younger families.

Leslie Appleton-Young, chief economist for the California Association of Realtors, predicts that more young couples will leave the state in order to purchase homes. The impact of that exodus will be both economic and personal.

'They're our future,' Appleton-Young said. 'They're our children. And we're pricing them out of the market.'

For now, a large number of first-time buyers still have the wherewithal to purchase less-expensive homes in the county. Finding a suitable place often requires an extensive search, financial help from relatives and the possibility of competition from buyers with greater resources.

However, agents said the market's pace has slowed in recent months. Many properties now attract fewer offers, a change that can benefit first-time buyers.

That was the case for Dan and Kristy Pribble, who this spring visited Wine Country and became intrigued with the idea of moving here from Torrance in Los Angeles County. Kristy Pribble, 37, an ultrasound technician, inquired about local jobs and was offered work with better pay at Santa Rosa Memorial Hospital.

The couple began house hunting here in late spring and moved to Santa Rosa this summer. Their search took them to nearly 50 properties as they sought a home priced between $400,000 and $500,000. But they only needed to make one formal offer, and it turned out they were the only ones to do so for the property, a four-bedroom tri-level in west Santa Rosa. The lack of competition was good news for the Pribbles, allowing them to negotiate the price with the seller.

'It was a noticeable change in the market from when we first started looking,' said Dan Pribble, 30, who works in sales for a wine distribution company.

The participation of first-time buyers in the state's housing market has been closely tied to the price of homes.

Historically, about four in 10 homes sold in the Golden State went to first-time buyers, according to the California Association of Realtors. But that share dipped a decade ago as home values soared, with the median home price in Sonoma County reaching a record high of $619,000 in August 2015.

Then prices crashed, hitting a low for the county of $305,000 in February 2009. Even in the midst of recession and uncertainty over near-term home values, younger couples stepped forward. In 2009, first-time buyers purchased nearly half of the homes sold in the state, the Realtor's association reports.

Prices up 75 percent

In the past five years, home prices have increased by more than 75 percent, with September's median for the county at $541,500. Not surprisingly, the share of first-time buyers in the California market has once more retreated to three in 10 homes sold.

In the county, only 25 percent of all households can afford the median-priced home, according to the Realtors group. In contrast, about 57 percent of the nation's households can afford the median-priced U.S. home.

That spread between prices here and the rest of the U.S. came about during the past four decades as the state's 'premium' exploded, Appleton-Young said. In 1970, the difference in cost between the median-priced home for California and the U.S. was only $10,000, even when adjusted for inflation. Today the difference is $255,000.

Dave Fahrner, the agent who represented the Pribbles, said years ago he observed the same sort of 'affordability' quandry in Marin County that buyers are now facing in Sonoma County. Some eventually look elsewhere, while others ditch the dream of making their first purchase a single-family house.

'Many of those buyers, because of the rise in prices, are now looking at condos,' said Fahrner, an agent with Terra Firma Global Partners in Santa Rosa.

'Bank of Mom and Dad'

First-time buyers around the nation also are turning more to friends and family to help with the required down payment. 'The Bank of Mom and Dad' has become increasingly necessary, according to real estate website Zillow.com.

From 2005 to 2007, 11 percent of presumed first-time borrowers around the U.S. reported receiving help from friends or family, Zillow published in a recent blog. From 2012 to 2014, that share doubled to 22 percent.

Alyssum and Trevor Garcia of Sebastopol acknowledged that one reason they decided to start looking for a first home was the offer of help from parents. Another is that later this month, the Garcias are expecting their first baby.

The couple began looking at homes in the spring and for the past four months have worked with the father/daughter team of John and Raina Duran of Coldwell Banker in Santa Rosa. The Garcias are seeking a home in the west county priced up to $400,000.

'Patience is a key thing we have learned,' said Trevor Garcia, 29, a carpenter. He and his wife have siblings who spent at least a year each before finding a home. Remembering that fact helps them not get discouraged, he said.

Getting real

All three couples said managing expectations is a hard but needed part of house hunting. It requires not spending more than you can afford, not expecting the prospective home to be perfect and not giving up when you can't get the house you wanted.

Allison Schindler said there were several homes that she and her husband had wanted to purchase, only to discover that others already had offered to pay more, in some cases as much as $25,000 over asking price.

'There was no point putting in an offer because we were already beat,' she said.

Plenty of first-time buyers experienced such letdowns in the last few years because they encountered other buyers who could make better offers, sometimes paying all cash. As a result, agents and brokers said, some buyers stopped trying.

'The buyers get a little burned out after a while,' said Steve Dick, manager of the CPS Real Estate office in Santa Rosa.

But agents are seeing fewer multiple offers this fall and more willingness by sellers to work with buyers.

'Now it's definitely less competitive,' said Jeremy King, an agent for Coldwell Banker who with his mother Peg King represented the Schindlers. The Kings noted that sellers now are more willing to accept offers from buyers with Veterans Administration loans, which require that all needed repairs be made, typically at the seller's expense, before the purchase is completed.

Even if the housing market is currently less competitive, more younger couples are still looking in Solano or Mendocino counties in order to buy a home and commute, said Pete Phillippe, a loan officer with Princeton Capital in Santa Rosa.

Numbers help tell the story. The county's median-priced home of $541,500 requires about $117,000 for the down payment and closing costs, plus an annual income of at least $80,000 in order to make the monthly payment of $2,660, including taxes and insurance. Such a large down payment is simply out of the reach of many first-time buyers, he said.

Even a home priced at $400,000 with a conventional loan still requires a down payment of $20,000, and an annual income of at least $75,600 a year in order to make the monthly payments of $2,434, including taxes and insurance. Yes, FHA financing can reduce some of those numbers, but any extra debt or negative credit issues can offset such reductions.

'First-time homebuyers are being squeezed out of the market,' said Phillippe, 'and that's frankly just the future.'

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com.