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NAR Report: Trends for home sellers and of homes sold in 2020

(REAL ESTATE BIG DATA) NAR’s 2020 report reveals the who, what, where, and why of homes sold. Here’s some trends to keep an eye on going into 2021.

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Open home being sold

It’s a pretty good time to sell a home.

With historic lows in inventory driving up prices in many markets, sellers are typically getting 99% of asking price and selling within 3 weeks, according to the numbers in the National Association of Realtors’ “2020 Profile of Home Buyers and Sellers.”

Also, people 54 and younger tended to trade up to larger, more expensive homes and were the most active sellers. Older people were more likely to downsize to smaller, less expensive homes.

While this latest edition of NAR’s annual report focuses on sellers who closed from July, 2019, through June, 2020, NAR added a look at trends related to the start of the COVID-19 pandemic, pulling out data from sellers who closed in April through June, 2020. They found upswings in sellers’ desire for more space and their sense of urgency to sell, as well as changes in how agents are marketing homes. (Trends for buyers also were seen in the demand for more space, including homes suitable for multiple generations.)

Here are some of the main takeaways from the full report.

Typical sellers stayed in their home 10 years.

The median number of years that sellers had been in their homes has held steady at 9 to 10 years since 2011. However, 2020’s most active sellers were age 65 and older and had been in their home for 16 years or longer. The seller short-timers were ages 18 to 34, and they typically sold within 5 years. Looking at property type, owners of detached single-family homes tended to stay the longest (median 11 years), followed by mobile/manufactured homes (median 9 years).

Furthermore, 69% of sellers had sold a home before; 31% were first-timers.

Sellers are getting what they ask for.

Tight inventory is continuing to drive up prices in many areas of the U.S., and homes are tending to sell quickly, typically within 3 weeks. For all sellers, the sales price is typically 99% of the final listing price. It’s even higher in the West at 100%, but some buyers in the South and Midwest are getting 101% to 110% over list.

How much of the asking price sellers got started to decline at 3 to 4 weeks, which is also when price reductions started to kick in.

Very few homeowners are delaying selling because they’re underwater.

Home prices are up, so the percentage of sellers facing trying to sell a home that’s worth less than their mortgage has decreased from 7% in 2019 to 6% in 2020. In addition, 10% of sellers who bought 11 to 20 years ago reported waiting to sell in hopes of a more favorable market. This doesn’t seem to be much of an issue for sellers, as 95% said they sold when they wanted to.

Sellers are making more money on their homes.

Typically $66,000 in equity, to be exact. That’s up from 2019, when the median was $60,000. The price gain went from 31% to 33%. Unsurprisingly, longer tenure meant even more money: 8 to 10 years made $79,900, 11 to 15 years made $49,800, and homes sold after 21 years brought in a whopping $152,300 over the original purchase price.

Equity Earned in Home Recently Sold, by Tenure in Home

Sellers tend to be older, have higher incomes, and be part of a married couple.

Some numbers:

  • Age: Median is 56. Most-active age groups were 65 to 74 (24%) and 55 to 64 (22%).
  • Income: 2019 median was $106,500, up from $102,900 in 2018. Highest incomes were in the Northeast and the West.
  • Race/ethnicity: 90% identified as White or Caucasian.
  • Household makeup: 71% married couples; 16% single females; 7 % single males; 4 % unmarried couples; 2 % other. 68% have no children under 18.

After the sale, they’re mostly buying nearby.

When it came to location, 70% of sellers stayed in the same state, 16% changed regions, and 14% went for the same region, different state. In fact, 40% of all sellers moved 10 or fewer miles away from their previous home. The median move was 20 miles away for all sellers, but for people age 65 and older it was 40. To add to that, 40% of sellers ages 65 to 74 moved more than 100 miles away. People in the West moved the farthest, with a median of 35 miles away.

Distance between home purchased and home recently sold, by age

Suburbs and the South are hot.

Of all homes sold, 41% were in a suburb or subdivision. Small towns made up 18%, urban areas/central cities had 13%, and rural areas took 15%. Interestingly, 80% of all homes sold were detached, single-family properties.

It’s not just the weather in the South that’s hot. The region accounted for 37% of homes sold or for sale, while the West had 25%, the Midwest had 24%, and the Northeast had 14%.

Location of Home Sold

Nearly half of sellers traded up on space; about a third traded down.

When it came to space, 44% of sellers bought a larger home, 30% kept about the same amount of space, and 30% went smaller. Sellers age 44 and younger grabbed 600 to 700 more square feet. Buyers 55 and older downsized by about 100 square feet. The majority of homes sold had 3 bedrooms and 2 full bathrooms.

Size of Home Purchased Compared to Home Recently Sold, by Age of Seller

Most sellers bought newer, more expensive homes.

When it came to vintage, 61% of sellers went on to buy a newer home, 26% found an older one, and 21% stayed with the same vintage. For 49% of sellers, trading homes meant paying more, whereas 27% bought a less expensive home, and 23% stayed at the same price point. The group who splashed out the most was ages 35 to 44, who paid $98,900 more than they had paid for the house they sold. Those 55 and older spent between $22,800 and $27,500 less than they had paid.

Price of Home Purchased Compared to Home Recently Sold, by Age of Seller

Being closer to their people and needing more space are the top reasons for selling.

For sellers overall, 15% said they wanted to move closer to friends or family, 14% said their home was too small, and 12% had a change in family situation (divorce, birth of a child, etc.). Another reason cited was job relocation including 11% of sellers, and those were people who moved the greatest distances.

For those who stayed in the same or a nearby neighborhood, the number one reason to sell was that the house was too small, and that includes nearly a third of first-time sellers. Reason number 2 was that the house was too big, including 12% of repeat sellers, although their top reason for selling was to be closer to family and friends (19%).

Primary Reason for Selling Previous Home, by First-Time and Repeat Sellers

Sellers understand the benefits of having an agent – and give their agents a good grade.

The percentage of sellers who worked with a real estate agent held steady from 2019 at 89%, a rise from 79% in 2001. But there were some regional differences. Homeowners in the West (92%) and the Northeast (91%) topped this list, whereas the lowest rates were in the South (89%) and the Midwest (88%).

Sellers generally reported being happy with the process: 69% said they were “very satisfied” and 21% marked “somewhat satisfied.” (On the buyers side, agents got higher marks: 76% said they would “definitely” use their agent again, while 15% said “probably.”)

FSBOs are pretty much no go; iBuyers haven’t caught on.

“For sale by owner” transactions stayed below the historic norm at 8% this year, after having been as high as 12% to 14% from 2001 to 2008. For sellers who did go that route, 51% already knew the buyer (compared with 8% of all sellers). iBuyer programs got fewer than 1% of recent sellers’ business.

Homes tended to be on the market for 3 weeks. More than that, and sellers got less.

The median number of weeks on the market for all sellers was 3 weeks, except for the Midwest, which logged 2 weeks. Sellers whose homes took 2 weeks to sell – more than a third of all sellers – typically got 100% of their asking price. For the 29% of sellers who sold in less than a week, they did even better and got more than they asked for.

As usual, the longer a property is on the market, the less sellers got of their asking price. Homes that sat on the market 17 weeks or more typically got the seller 94% of the listing price; only 16% of those homes got the initial asking price.

Sales Price Compared with Listing Price, by Number of Weeks Home was on the Market

Notably, 62% of all sellers did not reduce the asking price on homes sold. Reductions typically started to kick in at about 3 to 4 weeks on the market.

Number of Times Asking Price was Reduced, by Number of Weeks Home was on the Market

Less than half of sellers offered incentives.

Of all sellers, 67% offered no incentives, and sellers in the Northeast were least likely to try to sweeten the deal. Incentive offers typically started kicking in between 3 and 4 weeks on the market. Home warranties were the most popular incentive (17%), followed by help with closing costs (14%).

Incentives Offered to Attract Buyers, by Number of Weeks Home was on the Market

Lisa Wyatt Roe is an Austin writer and editor whose work has been featured on CNN.com/Travel, in Texas Parks & Wildlife Magazine and in the book “Seduced by Sound: Austin; 100 Musicians on Why They Make Music.” Travel and live music feed her soul. Volunteering with refugees feeds her sense of purpose. And making friends laugh feeds her deep (yet possibly sad) need to get all the laughing emojis on Facebook.

Real Estate Big Data

The NAR’s top 10 places for millennials to move to (a 2020 reflection)

(REAL ESTATE BIG DATA) If you’re a millennial, and wondering where you should move that can get you ahead even during this pandemic, here’s the top 10 cities for millennials.

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An analysis of the largest 100 metropolitan statistical areas in the US by the National Association of Realtors (NAR) has resulted in the release of their list of top housing markets for millennials from the past year of the pandemic. NAR used housing affordability, local job market conditions during the COVID-19 pandemic, share of millennials in the area, and inventory availability as part of their metrics in the development of the list.

“With relatively better employment conditions and a strong presence of millennials in these markets, more new home construction will be required to fully satisfy the housing demand as the economy reopens” said NAR’s Chief Economist Lawrence Yun. Nationally there has been a 6% increase in the percent of listed homes the typical household can afford to buy since 2019, but with median home prices in the $300k and $400k range in some of the top markets, many millennials will still be priced out.

The NAR Top 10 Housing Markets for Millennials during the Pandemic, listed alphabetically:

Austin-Round Rock, Texas:

  • Affordability, April 2020 (y-y change): 11%
  • Share of Millennials: 35%
  • New Listings, April 2020 (y-y change): -28%
  • Share of most affected employment: 20%
  • Median Home Price (Q1 2020): $341,500
  • Share of listings that the typical household can afford to buy (April 2020): 33%
  • Employment y-y change (April 2020): -9%

Dallas-Fort Worth-Arlington, Texas

  • Affordability, April 2020 (y-y change): 22%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -36%
  • Share of most affected employment: 21%
  • Median Home Price (Q1 2020): $269,700
  • Share of listings that the typical household can afford to buy (April 2020): 30%
  • Employment y-y change (April 2020): -8%

Des Moines-West Des Moines, Iowa

  • Affordability, April 2020 (y-y change): 11%
  • Share of Millennials: 31%
  • New Listings, April 2020 (y-y change): -16%
  • Share of most affected employment: 17%
  • Median Home Price (Q1 2020): $209,200
  • Share of listings that the typical household can afford to buy (April 2020): 57%
  • Employment y-y change (April 2020): -10%

Durham-Chapel Hill-Raleigh, North Carolina

  • Affordability, April 2020 (y-y change): 23%
  • Share of Millennials: 31%
  • New Listings, April 2020 (y-y change): -36%
  • Share of most affected employment: 15%
  • Median Home Price (Q1 2020): $293,800
  • Share of listings that the typical household can afford to buy (April 2020): 26%
  • Employment y-y change (April 2020): -11%

Houston-The Woodlands, Texas

  • Affordability, April 2020 (y-y change): 14%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -31%
  • Share of most affected employment: 19%
  • Median Home Price (Q1 2020): $245,300
  • Share of listings that the typical household can afford to buy (April 2020): 31%
  • Employment y-y change (April 2020): -8%

Indianapolis-Carmel-Anderson, Indiana

  • Affordability, April 2020 (y-y change): 12%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -35%
  • Share of most affected employment: 19%
  • Median Home Price (Q1 2020): $204,000
  • Share of listings that the typical household can afford to buy (April 2020): 47%
  • Employment y-y change (April 2020): -11%

Omaha, Nebraska/Council Bluffs, Iowa

  • Affordability, April 2020 (y-y change): 15%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -30%
  • Share of most affected employment: 18%
  • Median Home Price (Q1 2020): $197,000
  • Share of listings that the typical household can afford to buy (April 2020): 38%
  • Employment y-y change (April 2020): -9%

Phoenix-Mesa-Scottsdale, Arizona

  • Affordability, April 2020 (y-y change): 12%
  • Share of Millennials: 27%
  • New Listings, April 2020 (y-y change): -24%
  • Share of most affected employment: 21%
  • Median Home Price (Q1 2020): $308,900
  • Share of listings that the typical household can afford to buy (April 2020): 29%
  • Employment y-y change (April 2020): -8%

Portland, Oregon/Vancouver, Washington

  • Affordability, April 2020 (y-y change): 17%
  • Share of Millennials: 27%
  • New Listings, April 2020 (y-y change): -41%
  • Share of most affected employment: 19%
  • Median Home Price (Q1 2020): $416,100
  • Share of listings that the typical household can afford to buy (April 2020): 20%
  • Employment y-y change (April 2020): -12%

Salt Lake City, Utah

  • Affordability, April 2020 (y-y change): 13%
  • Share of Millennials: 32%
  • New Listings, April 2020 (y-y change): -14%
  • Share of most affected employment: 18%
  • Median Home Price (Q1 2020): $372,100
  • Share of listings that the typical household can afford to buy (April 2020): 30%
  • Employment y-y change (April 2020): -8%

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Real Estate Big Data

Ultra simple shortcut to attract new (or more) real estate investors

(REAL ESTATE BIG DATA) Without having to spend any money, this shortcut can attract more business to boost your bottom line with real estate investors – a win-win for the nation.

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Whether you’re a real estate veteran, or looking to expand your services to the real estate investment world, a wild shortcut has just been launched, and you already have access to it for free if you’re a Realtor.

Realtors Property Resource (owned by the National Association of Realtors (NAR)), rolled out a map layer to unveil the Qualified Opportunity Zones (QOZ) across the nation this year, and it’s a tool we should all be using regularly…

The QOZ program was created in 2017 as part of the Tax Cuts and Jobs Act and is designed to improve local economies (specifically the economically disadvantaged areas) through long-term investments with real estate investors.

There are 8,700 QOZs in America, and real estate investment and development in those areas are rewarded with tax incentives (potentially reducing their tax liability by 10-15%, and appreciation on the investment is tax free if held for at least 10 years).

And now, you can find the investment opportunities in seconds, generate reports for investors, connect with homeowners (via the “Mailing Labels” feature) in those areas, and so much more – the new RPR features combine to create one hell of a shortcut for you. Check it out:

Opportunity Zones

This is “Opportunity Zones” by Realtors Property Resource® on Vimeo, the home for high quality videos and the people who love them.

“With the Opportunity Zone initiative poised to transform American communities that have long been shunned by investors, NAR has developed resources to help facilitate and expedite investments in these areas. As our work continues, REALTORS® are committed to ensuring Americans can take full advantage of this valuable new initiative”, said Joseph Ventrone, NAR Vice President, Federal Policy and Industry Relations.

“These Opportunity Zones encourage private investment into low-income communities, with the intent of stimulating economic growth and job creation,” said Bob Turner, NAR’s 2019 Commercial Liaison and RPR Advisory Council Member. “Residential practitioners will notice homes that fall within Opportunity Zones gain a boost to their marketability because of increased attention, while Commercial practitioners will likely see properties once being skipped over turn into desirable investment opportunities.”

It’s not just a shortcut for practitioners and real estate investors, but meaningful help for underserved areas. Talk about a real win-win.

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Real Estate Big Data

NAR Report: How the home search process has changed in 2020

(REAL ESTATE BIG DATA) The 2020 National Association of Realtors annual report examined the home search process, with buyers utilizing online tools and agents to help find the perfect home.

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Woman holding phone in lap, doing an online home search.

There’s extensive data and topics to research when it comes to the National Association of Realtors annual report – everything from the trust home sellers place in agents, home financing, home sales (naturally), and real estate professionals and their relationship with buyers. Practically every angle of this important market has been broken down and examined to help deliver a clear picture of real estate sales across the nation. It’s all extremely valuable and highly worth perusing (psst: search “NAR report”).

Of course, searching for a home is a pivotal and significant part of the entire process, and the NAR report has delivered an in-depth analysis of everything as well. Let’s take a look and see what current trends were revealed.

Initial Search

When it comes to looking for a home initially, there are two main options that most buyers tend to go with – searching online versus contacting outside help (primarily a real estate agent, but family and friends were also viable resources).

With the advent of the pandemic in 2020 keeping several people at home, online searches were at their all-time highest (though this trend has continued to increase in recent years). In fact, a staggering 97% of all buyers utilized the internet at some point during the process.

With the advent of the digital listings and databases, it’s been shown that 43% of buyers are first looking for properties online, compared to 18% that go to a real estate agent first. Speaking broadly, first time buyers were more likely to take this step first, and there was a direct increase as buyers were older (though this percentage decreases after the
age of 64).

First Step Taken During the Home Buying Process, First-time and Repeat Buyers

Real estate agents were definitely the second most used avenue during the search process, and this did increase with aging demographics as well. Perhaps due to greater familiarity with searching online, younger generations did look up information on buying their first home at a higher rate than older counterparts (13% with the younger group versus 6% with the oldest).

First Step Taken During Home Buying Process, by Age

Information Sources

Of course, when it comes to where to find information and best to listen to, real estate professionals reigned supreme (91% reported successfully being helped by agents), and were the primary resources for every demographic – first time buyers, repeat buyers, new homes, and previously owned homes. Online searches and open houses came second and third respectively, and yard signs and online video sites also saw a lot of utilization. Methods after this – print advertisements, billboards, relocation companies, and television sources – finished out the bottom, but there was a wide margin between them and other methods.

Information Sources Used in Home Search, by First Time and Repeat Buyers, and Buyers of New and Previously Owned Homes

Length of Time From Searching to Buying

Perhaps again owing to the nature of the pandemic, the average time a buyer used from search to purchase decreased (a first since 2014), needing only eight weeks. A median of nine homes were looked at (five online only).

First time buyers needed a little more time on average than repeat buyers (nine versus eight weeks). Agents were still utilized frequently in all instances, and were usually contacted within three weeks of the initial search.

Length of Home Search, by Region

Difficulty During the Process

It should come as no surprise that searching for a home is a massive undertaking, and can prove to be an arduous process given the magnitude of what it entails. Just finding the right home to purchase is seen as the most difficult step, with 53% of buyers saying it gave them the most trouble. Paperwork followed at 17%, while simply understanding the process from start to finish was cited by 15% of buyers. As might be expected, first time buyers reported more difficulty across the board in all areas than repeat buyers.

Most Difficult Steps of Home Buying Process by First Time and Repeat Buyers and Buyers of New and Previously Owned Homes

Online Searching Trends

Online searching was first examined in 1995, where only 2% of buyers would utilize the internet during their home search process. This increased repeatedly until 2009 to 90%, dipped slightly until 2012, and has since generally been rising. It was almost an even split between mobile and desktop devices, with younger buyers focusing more on mobile and older more likely to use a desktop/laptop.

Percentage of Time Using Devices in Home Search, by Age

There’s actually a lot of information to process when it comes to online search trends – married couples versus single buyers generally searched online more, desktop searches utilizing video sites more often than mobile (46% versus 40%), and mobile users generally finding their home through their online searches while desktop might generally direct buyers to complete the process with a real estate agent.

Value of Website Features

Of course, how a website helps direct a buyer is extraordinarily important to the home search process. Photos were the clear primary resource here, with 89% of buyers saying that images were extremely useful in the process.

Detailed information about properties followed at 86%, and then there was a significant jump to the next most important feature, as buyers reported that floor plans were important 67% of the time).

Value of Website Features

Next Steps After Searches

Once homes were found online that proved attractive, more than half of first (51%) and repeat (59%) buyers would proceed to walk through the home. Following this, buyers might then see the home but choose to skip seeing the inside (37%), or would contact a real estate agent for additional information (35%). First time buyers tended to look for more information in general (on the home itself, about mortgages, and so on) to better prepare themselves.

Actions Taken as a Result of Internet Home Search, First-Time and Repeat Buyers

Method of Home Purchases

Perhaps the best conclusion to draw here is the home purchase itself. When that time comes, agents are still used the overwhelming majority of the time regardless of a buyer using mobile or desktop more than 50% of the time. With the former, an agent helps 88% of the time, and 90% of the time otherwise. Builder agents or direct contact with the previously owner – known or not – are far overshadowed here.

Method of Home Purchase, by Use of Internet

Satisfaction with the Search Process

Given all of the tools and data available to buyers, 64% reported that they were very satisfied with the entire process, 30% were somewhat pleased, and the remaining group said they were unhappy.

Satisfaction with Buying Process

Conclusion

The NAR Report really shows an incredibly exhaustive look into the home search process. Generally speaking, with so much information available online, buyers were eager to search with devices first and speak with real estate agents early on in the process. Further, digital resources such as photos, floor plans, and other data proved incredibly useful in helping determine if buyers should seek out the home or continue their search.

Perhaps the best conclusions to draw here are that first and repeat home buyers are actively consuming data from online sources, but still rely heavily on agents to help guide them through the process (including ultimately with purchasing the home). Given the unique circumstances of the 2020 Pandemic, it’s clear that searches and next steps are best started through websites and other repositories, and are then usually followed with experts that can provide their professional experience. It’s likely that these trends will – on average – continue in ensuring years.

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