People buy and sell their homes for a variety of reasons. You would think the way the economy is that the main reason would be to avoid foreclosure but the climate isn’t quite that gloomy. The annual survey conducted by the National Association of Realtors provides insight into detailed information about the experiences of buyers and sellers. Every year brings with it new demands and as we close in on the halfway point for 2016 the forecast is still robust. A full look at the survey can be seen here.
Gains and growth
A recent Realtor.com article suggests that “The 2016 housing market continues to be a picture of moderate, but solid growth.” Acceleration in existing home sales and prices have slowed to 3 percent year over year due to higher mortgage rates, continuing tight credit standards, and lower affordability. The construction market is seeing significant gains despite a shortage of labor.
That said, what motivates individuals to buy or sell? According to an article posted on Economist Outlook, past performance indicates that size does matter. The response “home is too small” remains the largest reason that people move. Conversely, the second most common reason to move, “job relocation” is still valid but is not as much as a motivator as it was in times past. For example, survey results reveal that in 2008, it peaked to a rate of 22% and in 2015 it was reported to be at 14%.
And like I mentioned at the beginning, “Move to avoid foreclosure” reached its peak among respondents back in 2008 at 8%. The following year the percent of respondents drastically decreased to 1% and has diminished every year since.
Interestingly, “moving due to retirement” has slightly increased from 3% in 2005 to 7% in 2015. There is also a small amount of growth in desire to be closer to friends and family, which could be a result of retirement, as well.
Numbers don’t lie
At 30 percent, the primary reason for purchasing a home was the desire to own a home of their own. Eighty-seven percent of buyers recently purchased their home through a real estate agent or broker. Eighty-eight percent of buyers would use their agent again or recommend their agent to others. Only eight percent (down from nine percent) of recent home sales were FSBO sales.
Just who is buying and selling?
I recently reported on how the buyer/seller market is broken down and the leading demographic is made up of millennials. This may be surprising as previous reports and outlooks have shown that mill’s are so deep in college debt that buying a house may be the last thing on their mind. Be that as it may, millenials are making an impact.
According to Realtor.com “Millennials are expected make up the largest demographic of home buyers in 2016, having represented 30 percent of the existing home market.”
Studies show that driven by increasing income, millennials will seek out homes that meet the needs of their growing families while putting the most weight on the safety of the neighborhood and the quality of the home.
Commute time and a preference for older homes have these buyers looking in city-centers and closer-in suburbs.
That doesn’t discount the rest of us. We buy and sell for a myriad of reasons and those reasons fortunately do not all have a negative connation. That strikes a positive note for the housing market in general and home owners specifically.