Major shift in who is buying homes
According to the 2011 National Association of Realtors® (NAR) Profile of Home Buyers and Sellers which surveyed 5,708 home buyers and sellers this summer, the demographic makeup and buying habits of home buyers has changed dramatically in the last year, reversing several trends set over the past decade.
These changes in demographics toward a more mature buyer has also changed the types of homes being bought and sold, as a higher share of buyers are repeat buyers which has caused an upward shift in the typical home size, as is typical with repeat buyers. New home sales continues to suffer compared to recent years past, despite a recent uptick in the market. We reported recently that the biggest surprise in the report is that when buyers move in to their newly purchased homes, they expect to live there for 15 years, “substantially longer than seen in previous years,” NAR notes.
Performance by home type
New home construction slowed during this economic downturn and has been one of the hardest hit segments of the housing market, with the share of buyers purchasing a new home hovering for the past two years around 15 percent with new homes most popular in the South (23 percent of buyers) and least popular in the Northeast (at 11 percent).
Not surprisingly, the most popular home type purchased in the last year were detached single family homes, accounting for 77 percent of the home buying market, while eight percent bought a townhome and nine percent a condo. Also not surprising is the fact that first time buyers are “slightly more likely” to purchase a condo or townhouse than repeat buyers and new homes purchased were “slightly more likely” than an existing home to be a condo or townhouse, and condos/townhouses were more likely to be purchased by a single buyer than a married or unmarried couple.
Performance by type of area
NAR reports that just over half of all buyers purchased a home in a subdivision or suburb with this type of purchase being the most popular in the South and least popular in the Northeast, just like new home purchases.
Additionally, 18 percent of buyers bought in a small town, 18 percent in an urban area and 11 percent in a rural area and it was more common for a first time buyer than a repeat buyer to buy in an urban area and not surprisingly, new home buyers were most likely to purchase in a suburb (where most new homes are being built). Suburbs were popular with repeat buyers as 36 percent purchased and sold a home in a suburban area.
Active adult communities and senior-related housing accounted for 13 percent of purchases made by Americans over the age of 50, bought for themselves, a family member or a friend and over half of these purchases were detached single family homes with one in five being condo purchases and 11 percent townhouses. The report notes that most homes purchased by buyers over 50 were located in suburbs and one in five were in a small town.
New homes in the ‘burbs are popular in the South but not the Northeast and most homes bought this year were single family detached homes with condos being popular with single buyers. The demographics of buyers are shifting rapidly due to widespread unemployment and tight lending, which is changing the types of homes being bought as well as what type of communities are being sold.