Challenges for Home Sellers The majority of 2012 home sellers (57 percent) sold for the very

first time, the highest percentage of first-time sellers in the Surveys history. The percentage of firsttime sellers increased nine percentage points from 48 percent last year, and was up 42 percentage points from its lowest level of 15 percent in 2007. The survey suggests that those who bought a few years ago, when prices were higher, are now selling.

Furthermore, sellers are not very optimistic about future home prices, only about one in five believe that home prices will go up in 10 years. Their outlook is even more pessimistic in the short run, with 12 percent believing prices will rise in five years, and only nine percent believing prices will rise in a year. With 74 percent of sellers having considered strategic default and 79 percent having tapped into their home equity by taking cash out, its no surprise that the majority feel uncertain about or have grim expectations for home prices in the future, as Exhibit 7 illustrates. This is a contrast to buyers, who mostly believe home prices will rise in the future, according to C.A.R.s 2012 Home Buyer Survey.

Why are people selling their homes? More than half (58 percent) claimed affordability problems such as could not afford the mortgage, moved to a less expensive market, and loss of household income as their primary reason for selling. Other reasons mentioned were job and income uncertainty (by 17 percent of sellers) and being underwater (by seven percent). Owners reasons for selling reflect the hardships that most are experiencing in coping with a challenging economic climate. Another indication of sellers experiencing challenging times is the fact that more than half (53 percent) currently rent their residence, compared to 47 percent who own their current residence. While more than half of all sellers are currently renting, this is an improvement from 88 percent of sellers who rented in 2011 and 58 percent who were renters in 2010.

Sellers moved out state in record numbers in 201244 percent, the highest in the Surveys history. The percentage of sellers who moved out state is up 39 percentage points from only five percent in 2004the lowest percentage in the Surveys history. Sellers leaving California in higher numbers comes as no surprise considering the fact that California has been experiencing negative domestic migration over the past decade, losing an average of 213,000 people a year since 2001. [1] [1] Gray, T., & Scardamalia,R.(2012).THE GREAT CALIFORNIA EXODUS: A CloserLook. New York: Manhattan Institute for Policy Research

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