The 2015 National Association of Realtors Profile of Home Buyers and Sellers has just been released, and it is filled with mixed news. The share of first time buyers is slipping from historic averages which is concerning, but home values are increasing and sellers are walking away with more cash.
But what of buyers? Let’s dig a little deeper into the profile on buyers.
Regarding first-time buyers, they made up 32 percent of all home buyers, down from 33 percent last year. It doesn’t sound like a major shift, but it is part of an ongoing trend.
The report notes that the historical norm for primary residence buyers is 40 percent of the market.
This report shows the lowest share of first time buyers, second only to 1987 when the share was 30 percent of first-time home buyers. Due to the lower share of first-time buyers the data shows a market with a higher share of married couples who have higher household income than seen in the last few reports.
Profiling the typical buyer
According to NAR, the typical buyer was 44 years old and had a median household income of $86,100. The median household income for 2014 rose again this year to $86,100 from $84,500 in last year’s report.
“First-time home buyers reported a median income of $69,400 and $98,700 for repeat buyers,” according to the survey. “Married repeat buyers have the highest income among all buyers and that figure jumped up this year to $108,600.”
All the single ladies
Notes the report, “From 2005 to 2010, single females made up one fifth of the market share. The continued drop of single females reflects the dual incomes from married couples had stronger purchasing power than single buyers.”
Married couple buyers are on the rise, accounting for 67 perfect of buyers this year. Only 15 percent were single females, 9.0 percent were single males, and 7.0 percent were unmarried couples.
Veterans and homeownership
This report indicates that of this year’s buyers, 3.0 percent are active-duty service members.
Nearly one in five home buyer this year is a veteran, pointing out the need for real estate professionals to be well versed in financing options available to a large portion of home buyers.
Race and sexuality: disproportionate numbers
Similar to previous years, 85 percent of recent home buyers identified their ethnicity as white, which of course is not a proportionate reflection of our nation’s ethnic makeup.
This is particularly disconcerting given the recent report that blacks purchasing homes between 2005 and 2007 lost an average of $16,911 in net worth, while whites who bought a house during the same period gained $24,000.
Also not reflective of our nation’s makeup is sexuality. The majority of buyers identified as heterosexual (90 percent), while only 3.0 percent identified as gay or lesbian, 1.0 percent bisexual, and 7.0 percent abstaining from answering.
Identifying these disproportionate numbers is identifying opportunity in our nation to usher under-served groups into homeownership, which most surveyed believe is the best possible investment, even over stocks.
Why buy a home?
The primary reason for purchasing a home was the desire to own. Period.
Of note in this report, 13 percent of home buyers purchased a multi generational home to take care of aging parents, for cost savings, and because children over the age of 18 are moving back home.
According to NAR, “For first-time home buyers, 64 percent purchased for the desire to own a home of their own (jumping up from 53% last year), compared to just 13 percent for repeat buyers.”
“Repeat home buyers bought for the following reasons: desire for a larger home (13 percent), job-related relocation (11 percent), desire for a smaller home (nine percent), and the desire to be closer to friends and family (nine percent).”
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.
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.”
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.
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.
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.”
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!
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.
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.
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