The National Association of REALTORS® (NAR) recently released this year’s edition of its Profile of Home Buyers and Sellers. This study was based on a 122 question survey that was sent to 148,011 home buyers, of which 8,767 home buyers responded from different regions of the country. Home buyers who were surveyed bought their home between July 2012 and June 2013. Data regarding home sellers was acquired from those home buyers that also sold a home.
The 132 page study has eight chapters, which cover the characteristics of home buyers, characteristics of homes purchased, the home search process, home buying and real estate professionals, financing, the experience of home sellers, home sellers and real estate professionals, and the experiences of those that decide to sell their home “For Sale By Owner”.
While the report is very detailed, here are some of the highlights.
The percentage of first-time home buyers has decreased. The latest data shows that first-time home buyers accounted for 38% of the homes purchased, which is a bit lower than the historical norm of 40% claimed by NAR. The percentage of first-time home buyers during 2009 and 2010 was 47% and 50%, respectively, which was when the first-time home buyer tax credit was in effect. In 2011 and 2012, the percentage of first time home buyers was 37% and 39%, respectively.
Two-thirds of recent home buyers were married couples. According to NAR, married couples accounted for 54% of first time home buyers and 72% of repeat home buyers. The report claimed that this is the highest percentage for married couples since 2001. NAR cites this statistic to suggest that married couples benefit from dual incomes, making them more able to buy a home despite tighter lending standards. Single females accounted for 19% of first time home buyers and 15% of repeat home buyers; single males accounted for 11% of first-time home buyers and 8% of repeat home buyers; and unmarried couples accounted for 13% of first-time home buyers and 4% of repeat home buyers. The category of “other” made of 2% of first time home buyers and 2% of repeat home buyers.
Newly built home purchases remained at 16%. New home purchases starting to drop in 2008. The percentage of home purchases that were new construction since 2001 was in the low twenties, and even rose to as high as 28% in 2003. This is the 3rd year in row that new home construction has accounted for 16% of home purchases.
Heating and cooling costs are the most important environmental feature. Here in the Northeastern part of the United States, heating and cooling costs were the most important feature for 38% of respondents. Other environmental features were energy efficient appliances (20%), energy efficient lighting (19%), environmentally community features (8%), landscaping for energy conservation (7%), and solar panels installed on home (1%).
The internet is where most home buyers found the home they purchased. The percentage of home buyers that found the home they purchased online was 43%, which was up 1% from last year. This percentage had been steadily increasing since 2001, when the percentage of home buyers who found the home they purchased online was only 8%. Other ways that a home buyer found the home they purchased was their real estate agent (33%), a yard sign (9%), a home builder or their agent (6%), directly from the seller or knew the seller (5%), print newspaper or advertisement (2%), home book or magazine (1%), and “other” (1%).
Most home buyers used a real estate agent to make their purchase. Eighty-eight percent of home buyers use a real estate agent or broker to make a purchase. A chart in the study shows that there has been a steady increase in the percentage of home buyers that have used a real estate agent since 2001, when only 69% of home buyers used an agent or broker. In 2003-2010, that percentage ranged between 77% and 83%. For the last few years it has been at 88%-89%. The other methods of making a home purchase are: directly from builder or builder’s agent (7%) or directly from the previous owner (5%).
Student loans are the largest hindrance to saving for a down payment. The popular fact-checkng website Poltifact would call this statement “mostly true” as the percentage of first-time home buyers whose home purchase was delayed by burdensome student loan debt was 54%, while only 23% of repeat home buyers faced the same burden. Credit card debt was the biggest hurdle to overcome for repeat home buyers at 42%. Other expenses that hindered saving for a down payment were car loans, child care, and health care costs.
Home sellers are staying in their house longer. According to NAR, the typical single-family home seller owned their home for a median of 9 years, which was up from 2007 when home owner tenure was 6 years. The number of years by the percentage of all home sellers is as follows: one year or less (3%), 2 to 3 years (9%), 4 to 5 years (13%), 6 to 7 years (15%), 8 to 10 years (18%), 11 to 15 years (19%), 16 to 20 years (9%), and 20 years or more (14%).
The Multiple Listing Service is the number one method real estate agents use to market a home. This only makes sense given where home buyers are looking to buy a home. What’s more the Multiple Listing Service we use here in the Pioneer Valley, which also covers most of eastern Massachusetts, allows us to syndicate our listings to other websites. Agents who use the MLS nationally is 85%, according to the NAR study. Other methods employed are yard signs (66%), open houses (51%), a real estate agent’s website (50%), real estate company’s website (45%), Realtor.com (42%), third party aggregators (27%), print newspaper advertisement (15%), direct mail (12%), real estate magazine (10%), newspaper website (9%), video (9%), other websites with real estate listings (8%), real estate magazine website (7%), social networking websites (6%), online classified advertisements (3%), video hosting websites (3%), and “other” (3%).
Those who sell their home “For Sale By Owner” (FSBO) net less than agent-assisted sales even after the commission. The median sales price for an agent-assisted home was $230,000, whereas the median sales price for a FSBO was $184,000. However, these numbers change depending on the situation. Among the 9% of FSBO home sales, 4% were buyers who knew the seller. When the seller knew the buyer, the median sales price was $174,000. When the seller didn’t know the buyer, the median sales price was $189,000. When a seller tried to sell their home themselves and later listed with a real estate agent, the median sales price drops to $175,900. However, the median sales price for a home that was listed with an agent from the beginning was $235,000. So it seems that listing your home with an agent is the most profitable, while even trying to sell the home yourself can only hurt you. These are interesting statistics because the number one reason for selling a home without the benefit of a real estate agent was the desire to save money on the commission, according to the study.
If you are planning on buying or selling a home in the Pioneer Valley, make your first call to Michael Seward at 413-531-7129. Michael Seward is a Certified Residential Specialist, a Certified Buyers Agent, a Certified Loss Mitigation Specialist, a Certified New Homes Specialist, and Green designee of the National Association of REALTORS®