Remember gold shag carpet and fake wood paneling? Home design trends come and go – fortunately the wood paneling trend is mostly gone – and the same is true for homebuying trends. If you want to give yourself the best chance at a new home, you’ve got to stay up to date on what’s happening in the market.
The National Association of Realtors has conducted a yearly homebuying trends survey since 1981 and now they’ve got a 35th anniversary edition, showing trends from the past several decades. The results show how home financing has changed, how the percentage of first-time buyers has decreased and how new tools are affecting the homebuying process.
Here are four finds from the survey’s history which show some decades-long trends in the homebuying process and what every homebuyer should know.
1: Downpayments are shrinking
According to the survey, the typical downpayment for all homebuyers in 1989 was 20 percent, the standard amount we’re used to hearing. But now, that number sits around 10 percent, meaning first-time and repeat homebuyers are putting down much less than they did in the past. This has helped lower the barrier for homeownership for buyers who are unable to save up the well-known 20 percent, but it also means they’re making larger mortgage payments each month.
2: The internet has become an essential tool for homebuyers.
One of the biggest changes revealed by the survey is how important the internet has become as a search tool for prospective homebuyers. It wasn’t even included in the questioning until 1995, at which point only 2 percent of buyers claimed they had used it in their search. Now, that number has risen to 92 percent, effectively becoming an essential part of the homebuying process. Not only does it allow you to learn more about a property more quickly, it also gives you the opportunity to see options all across the country, something that would have been much more difficult in the 1990s.
3: After a record high in 2010, first-time buyer share is nearly at a record low
First-time homebuyers aren’t usually the biggest group in the market, though they managed a 50 percent share in 2010. But this group now only accounts for around a third of the homes bought each year, a near-record low from 30 percent all the way back in 1997. There’s been plenty of worry over why Millennials are putting off purchasing their first home: student loan stress, a lack of credit history and even a changing attitude toward this purchase are some of the explanations for this trend. What’s clear from this data is that first-time buyers, as a whole, are declining. If you’re hesitant about your first home purchase, learn more about the process and what you can expect.
4: One consistent trend: the majority of buyers use an agent to purchase a home.
While searching for a home has certainly gotten easier in the past 35 years, it seems pretty obvious that the actual buying process has remained difficult enough to warrant the use of a real estate agent. In 1981, 82 percent of buyers used an agent or a broker, and in 2015 that number was 87 percent. While this has gone slightly lower or higher over the years, the majority of buyers have made use of a professional’s help when purchasing their home, since it’s helpful to get another set of eyes on all of the paperwork and make sure you’re handling everything correctly.
Here’s something you should take away:
A home remains, for many people, the most expensive thing they’ll ever buy. And, even though the internet has made this process more accessible, it’s still not always easy. With a recent lack of inventory in the market, buyers have to jump on a purchase or risk missing out. That’s why you still need an edge if you’re looking to buy and some education could be the solution. Check out all of our resources on buying your dream house.