Who is buying and selling homes in America? Almost everyone, it seems.
The numbers are in. In the last few months, mortgage interest rates bottomed out at a 50-year low. While they’ve since gone up a bit, the numbers of people buying existing homes or new construction housing has shot up. If this torrid pace continues, nearly 7 million homes could be sold this year.
But what’s more interesting is what the typical buyer and seller look like these days.
According to a new survey of more than 3,000 recent home buyers and sellers, the typical buyer walked through 10 homes, searched eight weeks to buy a home and moved 10 miles from their previous residence.
Conducted by the National Association of Realtors (NAR), a Washington, D.C.-based trade and lobbying association for about 900,000 real estate agents based in Washington, D.C., the survey found that the typical first-time buyer is 32 years old, has a household income of $54,800 and makes a down payment of 6 percent. The typical first-time buyer pays $136,000 for his or her home.
Repeat buyers are 46 years old, with a household income of $74,600. The typical down payment for repeat buyers is 23 percent, and they tend to buy homes that cost about $189,000.
Singles continue to account for a growing proportion of first-time buyers. The study found that 37 percent of first-time buyers are single, compared to 28 percent of repeat buyers. Single women accounted for 21 percent of purchases, while single men accounted for just 11 percent of buyers. Unmarried couples accounted for 8 percent of home buyers.
David Lereah, NAR’s chief economist, said first-time buyers remain an important part of the home buyer market, although the total number of first-time buyers fell slightly to just 40 percent of all buyers.
“The strong demand from first-time buyers provides a ready market for existing owners,” Lereah noted, adding “this dynamic in a low-interest rate environment is providing strong demand for all segments of the housing market and is contributing to record sales.”
In a finding that should reassure nervous sellers all over the country, sellers typically live in their home for 6 years before listing it and had listed their home for five weeks before selling it. The median home size was 1,830 square feet, and the typical seller bought a home that was 18 percent larger than the home he or she sold.
The survey also looked at who is using real estate agents to buy and sell homes. According to NAR, three out of four buyers purchased a home through a real estate agent or broker, up from 69 percent in 2001. Of the rest, 14 percent bought from a builder and 9 percent purchased their home directly from the seller.
Sellers, the study found, used a real estate agent better than 80 percent of the time. Just 14 percent of sellers sold by owner, down from 18 percent in 1997.
NAR President Cathy Whatley, a broker based in Jacksonville, Florida, said the “for sale by owner” (FSBO) numbers indicate there are plenty of homes that are selling privately, between sellers and buyers who knew each other prior to the transaction.
“If you look at homes placed on the open market, only 5 percent of buyers in early 2003 purchased directly from sellers they didn’t know in advance of the transaction, down from 11 percent in 2001,” Whatley said.
The survey found that by-owner sellers have trouble understanding and completing the paperwork, preparing a home for sale, getting the price right and having enough time for all aspects of the sales process.
What is certain is the number of consumers using the Internet to facilitate part of their home buying or selling experience is growing. Several recent surveys, including the recent NAR survey, confirm that more than 70 percent of consumers now use the Internet as a tool to aid their purchase or sale of property.
Moreover, Internet buyers tend to be younger and wealthier than average buyers. According to the NAR survey, the typical Internet buyer is married, 38 years old, with a household income of $70,700. On the other hand, the non-Internet buyer is usually married, 47 years old and has a household income of $56,300.
Aug. 22, 2003.