NAR Survey Catalogs Changes in Home Buyer Characteristics

The National
Association of Realtors® (NAR) says its 2018 Profile of Home Buyers and Sellers
confirms that student debt balances are an increasing concern and that single,
female buyers are still a powerful force in homebuying.

The report, the
result of an annual survey NAR conducts among recent homebuyers and sellers,
identifies other housing trends including the rising age of repeat homebuyers,
increasing levels of down payments, the difficulties faced by aspiring first-time
buyers, the growing reliance by sellers on professional real estate agents, and
the impact of pets on homebuying decisions.

“With the lower end of the housing
market – smaller, moderately priced homes – seeing the worst of the inventory
shortage, first-time home buyers who want to enter the market are having
difficulty finding a home they can afford,” said NAR Chief Economist Lawrence
Yun. “Homes were selling in a median of three weeks and multiple offers were a
common occurrence, further pushing up home prices.  These factors
contributed to the low number of first-time buyers and the struggles of
would-be buyers dreaming of joining the ranks of homeownership.”

Single females accounted for 18
percent of all home buyers, unchanged from the 2017 survey. Those women, as a
group, were second only to married couples (63 percent) and had double the participation
rate of single males. The men however tended to purchase more expensive homes,
a median price of $215,000 compared to the female cohort’s median of $189,000.

The share of first-time home buyers fell
from 34 percent to 33 percent, continuing a three-year decline. These buyers have
not risen to their historic pre-crash participation rate of 40 percent or
greater since the first-time buyers’ credit ended in 2010.

“Low inventory, rising interest rates
and student loan debt are all factors contributing to the suppression of
first-time home buyers,” said Yun. “However, existing home sales data shows
inventory has been rising slowly on a year-over-year basis in recent months,
which may encourage more would-be buyers who were previously convinced they
could not find a home to enter the market.”

Thirteen percent of respondents said
saving for a down payment was their largest hurdle and of those 50 percent
specifically mentioned student loan debt. Twenty-four percent of all buyers
indicated that they have such debt, at a median of $28,000, and 40 percent of
first-time buyers indicated a median debt of $30,000. 

“Even with a thriving economy and an
abundance of job opportunities in many markets, monthly student loan payments
coupled with sky-high rents and rising home prices make it exceedingly
difficult for potential buyers to put aside savings for a down payment,” said
Yun.

Despite the challenge and even though down
payments can be as low as 3 percent, respondents said they had put a median of
13 peercent down on their recent purchases, up from 10 percent in 2017 and the
largest percentage since 2005.  For first-timers the median was up 2
percentage points from last year to 7 percent, the highest since 1997, while
repeat buyers paid a median 16 percent, compared to 14 percent and the highest
since 2010.  For most, the source was
their personal savings.  Repeat buyers also
used the proceeds from selling a home while about a quarter of first time
buyers used a gift from a friend or relative.

Eighty-two percent of buyers chose a detached,
single-family home as opposed to a townhouse or row house (8 percent) or a
condo/duplex/apartment unit (4 percent) and only 9 percent listed downsizing as
reason they moved.  In fact, 73 percent
of buyers purchased a home that was either larger or similar in size to what
they previously owned.

The median age of first-time home buyers
was stable at 32 years for the third straight year, but the age of repeat
buyers was at an all time high of 55 years. First timers had a median income of
$75,000, the same as last year, and they spent $203,700 on their homes which
contained a median of 1,600 square feet. 
For repeat buyers the median income was $100,000, up from $97,500 last
year and they spent $280,000 on their 2,000 square foot homes.   

Fifteen percent of all buyers
said that convenience to vets and/or outdoor space for their pet was a critical
factor in determining where they wanted to purchase their home. That number
rises to 20 percent, or one-fifth of buyers, for unmarried couples.

The internet came into play at some
point during the housing search for 95 percent of buyers, identical to 2016 and
2017 surveys.  Fifty percent said they
found their eventual home on line. Eighty-six percent of buyers used a real
estate agent while FSBOs or For-Sale-By-Owner sales fell
to an all-time low of 7 percent.

NAR conducted its survey in July by
mail among a weighted random sample of recent homebuyers. A total of 7,191
responses were received from persons who had purchased a primary residence
between July 2017 and June 2018.

Article source: http://www.mortgagenewsdaily.com/10292018_nar_buyer_survey.asp

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