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2015 National Association of Realtors Profile of Home Buyers and Sellers released [BREAKING]

In the highly anticipated annual report by NAR, home buyers and sellers’ habits are analyzed so we can learn how they find their agent, what they’re buying, their demographics, and so much more.

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FSBO transactions are at an all-time low, as 90 percent of home buyers and sellers used a real estate agent, according to the 2015 National Association of Realtors Profile of Home Buyers and Sellers.

The report is chock full of mixed news, unveiling that most buyers end up finding the home they purchase through an agent (not a website), while first-time buyers declined to a worrisome point. The report also indicates that tight inventory conditions have plagued the industry, yet has sped up the time it takes for a buyer to find their home.

For 34 years, NAR has profiled buyers and sellers and evaluated the demographics, preferences, motivations, plans, and experiences of recent home buyers and sellers (owner-occupants).

First time buyers remain a point of concern

For the third consecutive year, the share of first-time buyers declined to 32 percent (down one percent from 2014), hitting the second-lowest share since reporting began. The historic average is 40 percent of purchases.

Dr. Lawrence Yun, NAR Chief Economist, says the housing recovery’s missing link continues to be the absence of first-time buyers.

“There are several reasons why there should be more first-time buyers reaching the market, including persistently low mortgage rates, healthy job prospects for those college-educated, and the fact that renting is becoming more unaffordable in many areas,” said Dr. Yun.

He adds, “Unfortunately, there are just as many high hurdles slowing first-time buyers down. Increasing rents and home prices are impeding their ability to save for a down payment, there’s scarce inventory for new and existing-homes in their price range, and it’s still too difficult for some to get a mortgage.”

home buyers

For the first time, we understand why

Yun says this year’s survey perhaps offers additional clues to why fewer first-time buyers are reaching the market. “First-time buyers reported that debt (all forms) delayed saving for a down payment for a median of three years, and among the 25 percent who said saving was the most difficult task, a majority (58 percent) said student loans delayed saving,” he said.

“With a median amount of student loan debt for all buyers at $25,000, it’s likely some younger households with even higher levels of debt can’t save for an adequate down payment or have decided to delay buying until their debt is at more comfortable levels.”

2015 HBS Infographic

More married couples in the market

Most markets saw rising home prices and fewer first-time buyers in the market, so it makes sense that the share of buyers that are married rose to 67 percent (up from 65 percent in 2014). They have higher household income than previous years, with married repeat buyers taking the top spot for highest income among all buyers ($108,600).

The share of single female buyers fell from 16 to 15 percent (sorry, Beyonce), and single male buyers remained at 9.0 percent.

“Similar to some of the obstacles facing first-time buyers, tighter credit conditions and having less purchasing power than households with dual incomes likely led to the share of single-female buyers declining to its lowest since 2001 (also 15 percent),” noted Dr. Yun.

First time buyers vs. repeat buyers

While the median age of first-time buyers remains 31, repeat buyers’ average age is 53 years old.

First-time buyers’ median income is $69,400 (up from $68,3000 in 2014), while repeat buyers average $98,700 (up from $95,000 in 2014).

Repeat buyers purchased a median 2,020sf home costing $246,400 while first-time buyers purchased a 1,620sf home costing $170,000.

Why did buyers buy this year?

The report indicates that buyers continue to see buying a home as a good financial investment, up one percent from last year to 80 percent. Fully 43 percent believe it’s better than stocks.

The desire for first-timers to own their own home surged this year, with 64 percent saying it was their primary reason for purchasing, up 11 percent from last year.

Repeat buyers typically bought not only because they want to own (13 percent), but to own a larger home (13 percent).

Roughly half of all buyers said that the timing was “just right” and that thy were simply ready to purchase a home.

Looking ahead, first-time buyers plan to stay in their home for 10 years and repeat buyers plan to hold their property for 15 years.

How buyers found their home

More buyers used the web as the first step of their search (42 percent), four out of five buyers who searched for homes online ended up purchasing through an agent.

NAR President Chris Polychron, says the two most popular resources used during the home search process continue to primarily be online websites (89 percent) and real estate agents (87 percent).

“Although buyers between the ages of 18-24 were the most likely to use an agent (90 percent), over 85 percent of buyers in each of the other age categories also used an agent during their home search,” observed Polychron.

“With tight inventory conditions leading to stiff competition in several parts of the country and what’s found online sometimes not entirely accurate, buyers are turning to Realtors® for expert advice and assistance in navigating today’s fast-moving housing market,” he added.

Home searches done on mobile or tablet applications surged from 45 percent in 2013 to 61 percent this year, with yard signs and open houses remaining relevant to the home search process at 51 and 48 percent respectively.

More buyers moving to the burbs

The average home bought this year was a 3-2, built in 1991. A detached single-family home remains the most common type of home purchased at 83 percent, and townhomes remaining at 7.0 percent.

Of note, the report indicates that more buyers are moving to the burbs (52 percent, up two percent from last year), with 20 percent buying in a small town, 14 percent in an urban area, 13 percent in a rural area, and 2.0 percent at a resort/recreation area.

Recent buyers also moved further from their previous residence this past year at a median distance of 14 miles (12 miles in 2014).

Motivations behind neighborhood selection

The report indicates that like in years past, what motivates people to choose a neighborhood is the “quality of the neighborhood” at 59 percent. Convenience to jobs ranked second at 44 percent, and overall affordability at 38 percent.

Unmarried couples were the most likely to cite convenience to entertainment and leisure activities (26 percent), and single women were the most likely to cite convenience to friends and family as an influencing factor (43 percent), notes the report.

Let’s talk about sellers

Most homes this year were sold with an agent (89 percent), with FSBOs hitting their lowest share (8.0 percent) since reporting began in 1981.

“Although the Internet and digital technology have created several channels for sellers to market their listings to a wider cast of potential buyers, the preference to use a Realtor® to sell a home has never been stronger,” said Polychron.

The typical seller is 54 years old, married, earns $104,100, and were in their home for nine years before selling.

The age is up five years from 2010, and household income rose $7,400 from last year. The average time in a home before selling sped up by one year compared to 2014.

home sellers

Time on the market remains at four weeks

According to NAR, “Fewer sellers this past year (14 percent) wanted to sell earlier but were stalled because their home had been worth less than their mortgage (17 percent a year ago).”

This year, sellers realized a median equity gain of $40,000 (up nearly $10k in one year). The median time on market remained at four weeks and sellers moved a median distance of 20 miles, typically because their home was too small.

Referrals for listing agents still rule

NAR notes that “A combined 66 percent of responding sellers found a real estate agent through a referral by a friend, neighbor or relative, or used their agent from a previous transaction.”

Client referals and repeat business remains the primary source of business for all real estate agents, with most sellers (84 percent) noting they would definitely (67 percent) or probably (17 percent) recommend their agent for future services.

#NARprofile

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Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

NAR Reports

Home sales on the rise – don’t call it a comeback (okay, do)

(REAL ESTATE) Inventory levels continue to fall as prices rise, making for a competitive market. After a tough winter, February saw considerable gains in home sales.

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For years, inventory levels have been sinking, and prices have been growing, making the home buying process increasingly complex and sometimes discouraging. But after two consecutive months of declining sales, existing-home sales made a comeback in February, rising 3.0 percent, according to the National Association of Realtors (NAR). Sales are now 1.1 percent higher than February of last year. #GoodNews

Although home sales in the Midwest and Northeast saw a dip in this period, the South and West regions skyrocketed, boosting the national numbers.

Dr. Lawrence Yun, NAR’s Chief Economist noted that “The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices – especially in the West – shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

Added Yun, “The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month. Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”

Click to enlarge.

In February, the median home price rose to $241,700, a 5.9 percent increase from February 2017, and the 72nd straight month of annual gains. The average days on market fell to 37, down from 41 in January, and 45 last February. That’s what we call a competitive market.

NAR President Elizabeth Mendenhall comments on the difficulty first-time buyers are seeing in this competitive market. “Realtors® in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their underperforming share of overall sales to start the year. Prospective buyers should start conversations with a Realtor® now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”

Regional performance varied, with sales in the West outperforming all other regions. While sales fell in the Northeast by 12.3 percent, and dropped 2.4 percent in the Midwest, they skyrocketed 11.4 percent in the West, and 6.6 percent in the South.

february existing home sales

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NAR Reports

Existing home sales surged in October, what’s next?

(REAL ESTATE NEWS) Existing home sales rose in October despite continually tight inventory levels and rising home values.

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starter homes debt existing home sales

Despite the challenges of ongoing political uncertainty, extremely tight inventory conditions, and home values that continue to rise, existing home sales rose 2.0 percent in October, according to the National Association of Realtors (NAR).

This marks the strongest home sales pace since June, yet are 0.9 percent below October 2016. October’s average days on market was 34, down from 41 days on this month last year.

The median price has risen 5.5 percent in the last year to $247,000 with October marking the 68th consecutive month of annual increases. Nearly half of all homes on the market in October sold in under 30 days.

Dr. Lawrence Yun, NAR Chief Economist said, “While the housing market gained a little more momentum last month, sales are still below year ago levels because low inventory is limiting choices for prospective buyers and keeping price growth elevated.”

Added Yun, “The residual effects on sales from Hurricanes Harvey and Irma are still seen in parts of Texas and Florida. However, sales should completely bounce back to their pre-storm levels by the end of the year, as demand for buying in these areas was very strong before the storms.”

Regional performances varied with sales rising in the Northeast by 4.2 percent, in the West by 2.4 percent, the South by 1.9 percent, and 0.8 percent in the Midwest.

Prices also varied depending on region, with the median price in the West rising 7.8 percent above October 2016 (to $375,100), 6.6 percent in the Northeast (to $272,800), 7.1 percent in the Midwest (to $194,700), and 4.6 percent in the South (to $214,900).

Dr. Yun expects conditions to remain competitive through the winter, but housing is experiencing a tremendous hanging chad right now – what will politicians do to the tax deductions that incentivize homeownership in the first place?

NAR President Elizabeth Mendenhall, says the pending tax reform legislation in both the House and Senate is a direct attack on homeowners and homeownership, with the result being a tax increase on millions of middle-class homeowners in both large and small communities throughout the U.S.

“Making changes to the mortgage interest deduction, eliminating or capping the deduction for state and local taxes and modifying the rules on capital gains exemptions poses serious harm to millions of homeowners and future buyers,” said Mendenhall. “With first-time buyers struggling to reach the market, Congress should not be creating disincentives to buy and sell a home. Furthermore, adding $1.5 trillion to the national debt will raise future borrowing costs for our children and grandchildren.”

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NAR Reports

Sustained lull in signed contracts means pullback in home sales

(REAL ESTATE NEWS) Existing home sales aren’t looking super hot this month, but it’s not the bad news that you’re thinking – let’s discuss!

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Existing home sales slide in June

Low supply has kept home sales muted, with existing home sales dipping 1.8 percent in the month of June, albeit 0.7 percent above June of 2016, according to the National Association of Realtors. The Midwest region is the current bright spot as the only area sales actually rose during this period.

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Dr. Lawrence Yun, NAR Chief Economist, says the previous three-month lull in contract activity translated to a pullback in existing sales in June.

“Closings were down in most of the country last month because interested buyers are being tripped up by supply that remains stuck at a meager level and price growth that’s straining their budget,” said Yun.

He added, “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”

There’s a silver lining

“The good news is,” observes Yun, “that sales are still running slightly above last year’s pace despite these persistent market challenges.”

The median price for an existing home rose 6.5 percent over the last year to $263,800, surpassing May as the new peak, and the 64th consecutive month of year-over-year gains.

Housing inventory declined 0.5 percent from the previous month, and 7.1 percent over the last year. Average days on market rose one day from May to 28 in June, which is down from 34 days in June 2016.

Supply and demand challenges

First time buyers were 32 percent of sales in June, down one percent from both in May and a year ago. Yun says “It’s shaping up to be another year of below average sales to first-time buyers despite a healthy economy that continues to create jobs,” said Yun.

“Worsening supply and affordability conditions in many markets have unfortunately put a temporary hold on many aspiring buyers’ dreams of owning a home this year,” noted Yun.

Spicy sales in the Midwest

In the Midwest, sales rose 3.1 percent from May but remain unchanged from this time last year. The median price rose 7.7 percent in the last year to $213,000.

In the Northeast, existing home sales actually fell 2.6 percent, but are 1.3 percent above a year ago (the median price was $296,300, up 4.1 percent for the year).

The South saw a 4.7 percent dip in sales ((unchanged from a year ago) and the median price in the South was $231,300, up 6.2 percent from a year ago.

Sales in the West declined 0.8 percent but are 2.5 percent above June 2016. The median price in the West was $378,100, up 7.4 percent from June 2016.

#HomeSales

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