Whether they’re in the market to buy a home, hoping to unload their abode, or both, most folks are aware of the real estate landscape these days. In a nutshell: Home prices continue to reach new highs, mortgage interest rates are low, and competition among buyers is fierce for what few homes there are for sale. But most buyers and sellers don’t know much else about the competition, which could put them at a serious disadvantage at the bargaining table.
Whether you’re looking for leverage with a buyer or seller, or trying to make yourself stand out in a crowd, an annual report gives a lot of this helpful intel on who’s active in the real estate market today.
For starters, home buyers are getting older. Much older. They hit a new high of a median 47 years of age, according to the National Association of Realtors® 2019 Profile of Home Buyers and Sellers report. That’s compared with just 31 in 1981 and 46 in 2018. And the wants and needs of a 47-year-old are quite different from those of a 31-year-old!
First-time buyers aren’t getting any younger either, and they make up about a third of those scouring the market for a home. Their median age rose to 33, one year more than in 2018. The report is based on a survey of nearly 6,000 buyers who purchased primary residences between July 2018 and July 2019.
“Traditionally, the first-time buyer age has ranged between 28 and 32,” says Jessica Lautz, NAR’s vice president of research. “While 33 doesn’t seem like a huge jump, it does indicate that homes are more expensive and it takes a longer time to find a home and save for a home.”
Meanwhile, repeat buyers were a median 55, holding steady from the previous year.
“People are working longer and living longer,” says Lautz.
Know the competition: Who’s buying homes?
Despite the high prices making it harder for young people to become homeowners, they’re finding a way to do it. About a quarter of buyers in the survey were aged 25 to 34. The 35-to-44 age range accounted for 20% of respondents.
That’s likely because those are the ages when folks typically get married and start having children. Suddenly, extra bedrooms and good school districts start to become more appealing.
Nearly two-thirds (61%) of recent buyers were married. An additional 9% were unhitched couples. But even those without partners are getting into the real estate game: About 17% of buyers were single women, and 9% were single men.
Not surprisingly, today’s buyers tend to be well-educated, as education typically leads to higher incomes. Nearly three-quarters, or 69%, of buyers had obtained at least a bachelor’s degree. By contrast, less than 1% of buyers didn’t finish high school, and 19% stopped their education after high school.
Meanwhile, 12% of buyers had associate degrees and 31% received bachelor’s degrees. And 38% had gone on to work toward, or obtained, an advanced degree.
With all that education, it’s not surprising that those buyers are also making good money. How else could they afford to break into this uber-expensive market?
Buyers had a median household income of $93,200—compared with just $61,937 nationally in 2018, according to NAR and U.S. Census Bureau data.
They also overwhelmingly tended to be white, making up about 84% of buyers. Hispanics made up 7% of buyers and Asians made up 5%, while blacks represented about 4% of buyers. An additional 3% were not identified.
“Homeownership has not rebounded since the recession, and we see small numbers of minorities entering homeownership today,” says Lautz. “Black home buyers are less likely to receive family assistance when purchasing a home. And they’re more likely to be denied a mortgage.”
Just because they’re doing well financially doesn’t make the home-buying process any easier. Folks searched for the right homes in their price points for a median of 10 weeks, looking at about nine properties before getting the right one, according to NAR.
What kinds of homes are most in demand?
Despite a wave of downtown revitalization efforts and the glamour of city life, buyers are still clamoring for less exciting (but far more practical) detached, single-family homes in the suburbs.
About half of all buyers headed to the burbs, where larger homes with multiple bedrooms and yards abound. Just 13% chose urban areas—the same percentage that opted for rural areas—and 22% preferred small-town living.
“There are more people buying in suburban areas and small towns as they look for more affordable places to live,” says Lautz. “When buyers look for homes in city centers, they can be too expensive.”
When choosing a location, buyers are most concerned with the quality of their new neighborhood, commute, and affordability.
Eighty-three percent of home purchases were single-family abodes. In comparison, just 6% were townhouses or row homes and 5% were condos. There just aren’t as many reasonably priced condos and townhouses available outside of the cities.
“There are very high-end, luxury condos being built in city centers,” says Lautz. “But in the suburban areas and in small towns, which are more affordable, you’re more likely to find single-family homes.”
The typical home had three bedrooms and two bathrooms and clocked in at 1,850 square feet. It was built in 1990.
The majority of buyers, 87%, got existing (previously lived-in) homes. These homes tend to be cheaper; there hasn’t been much affordable new construction in recent years. Just 13% opted out of doing any renovations and bought brand-new residences.
Buyers paid a median $257,000 for their properties, forking over 98% of the asking price. And the overwhelming majority of them, 86%, needed financing (i.e., mortgages) to make that happen.
Folks stayed in their properties for a median 10 years before moving on. But today’s buyers said they planned to stay in their abodes for a median of 15 years. And about 20% said they don’t plan to move—ever.
These are the folks who could sell you the perfect home
Home sellers tended to be a lot older—and wealthier—than buyers. They were a median 57 years old with slighter higher household incomes of $102,900. Nearly three-quarters, 72%, are married. And they’re more likely to be empty nesters or to have no children.
Sellers tend to also be buyers. About 70% sold their homes and bought new ones within the same state. Their top reason for moving was to be closer to their family and friends. That was followed by needing a larger abode or having to move for work.
“They could be wanting to be near their grandkids,” says Lautz. “Child care costs are extremely expensive so perhaps they’re helping out” their own children.
Homes that sold were on the market for only about three weeks, a sign of the hot market.
The best part of the sale is that sellers pocketed a profit. They sold their properties for a median $60,000 more than what they originally paid for them.
“The time on the market is historically low,” says Lautz. “Because people are staying in their homes for longer periods of time, they are experiencing more appreciation—especially as home prices have risen in recent years.”
Source: Housing Trends Feed