What Home Buyers and Sellers Want You to Know about Them

Get Insights from the 2013 NAR Home Buyers and Sellers Survey

December 26, 2013
By Tracy Polgar, MORe Now Contributor
According to the 2013 NAR Profile of Home Buyers and Sellers survey, while the housing market has shown a healthy recovery over the past two years, restrictive mortgage lending standards are still preventing some qualified buyers from reaching the American Dream, especially first-time buyers and especially singles.
"Single home buyers have been suppressed for the past three years by restrictive mortgage lending standards, which favor dual-income households who are more likely to have higher credit scores," said NAR Chief Economist Dr. Lawrence Yun. The overall market share of single buyers declined to 25 percent in both 2012 and 2013.
Expect Mortgage Rates to Rise
"Given that mortgage rates are expected to gradually rise, we need greater access to credit for a sounder housing recovery. Affordability conditions remain favorable in much of the country, but consumers need access to safe and sound financing, particularly the 30-year fixed-rate mortgage and with low down payment options for first-time buyers," Yun said.
First-Time Home Buyers
NAR reports that 38 percent of all home purchases this year were made by first-time home buyers, down from 39 percent in 2012 study. The long-term average in the survey, dating back to 1981, shows that four out of 10 purchases are first-time buyers. "Historically, first-time buyers are instrumental in housing recoveries because they help existing home owners sell and make a trade," said Yun.
The median age of first-time buyers was 31, unchanged from 2012, and the median income was $67,400. The typical first-time buyer purchased a 1,670 square-foot home costing $170,000.
When asked about the primary reason for purchasing, 60 percent of first-time buyers cited a desire to own a home of their own.
Repeat Home Buyers
The typical repeat buyer was 52 years old and earned $96,000. Repeat buyers purchased a median 2,060-square foot home costing $240,000. For repeat buyers, 16%  wanted a larger home, 12 percent had a job-related move and another 12 percent said they just wanted to own a home of their own.
Financing Specifics
NAR reports that 90 percent of buyers financed their home purchase. The median downpayment ranged from 5 percent for first-time buyers to 14 percent for repeat buyers.
First-time buyers used a variety of resources for the loan downpayment: 78 percent tapped into savings; 27 percent received a gift from a friend or relative, usually from their parents; and 7 percent received a loan from a relative or friend. Nine percent sold stocks or bonds and 8 percent tapped into a 401(k) fund. Ninety-five percent of entry-level buyers chose a fixed-rate mortgage, four out of 10 financed with a low-downpayment FHA mortgage and 8 percent used the VA loan program with a no downpayment requirements.
NAR reported that 80 percent of home buyers believe their home is a good investment, 44 percent believe it's better than stocks, 91 percent were satisfied with the buying process.
Home Search Begins Online
The typical buyer began their home search online and then contacted a real estate agent. Buyers searched a median of 12 weeks and visited 10 homes. In searching for a home, 92 percent used the Internet, 89 percent used real estate agents, 51 percent yard signs, 45 percent each attended open houses and used a mobile application, and 42 percent used mobile search engines.
When buyers were first asked there they first learned about the home they purchased, 43 percent said the Internet; 33 percent from a real estate agent; 9 percent a yard sign or open house; 6 percent from a friend, neighbor or relative; 5 percent from home buyers; 2 percent directly from the seller; 1 percent a print or newspaper ad and less than 1 percent from other sources.
Ninety-percent of home buyers who used the Internet to search for a home purchased through a real estate agent, as did 69 percent of non-Internet users, who were more likely to purchase directly from a builder or from an owner they already know in a private transaction.
While sellers had been in their previous home for a median of nine years, first-time buyers plan to stay for 10 years and repeat buyers plan to hold their property for 15 years.
Biggest Factors for Choosing Home
The NAR Survey reveals that the biggest factors influencing neighborhood choice were quality of the neighborhood, cited by 63 percent of buyers; convenience to jobs, 48 percent; overall affordability of homes, 40 percent; and convenience to family and friends, 38 percent. Other factors with relatively high responses including quality of the school district, 29 percent; neighborhood design, 28 percent; convenience to shopping, 26 percent; convenience to schools, 22 percent; and convenience to entertainment or leisure activities, 20 percent.
Commuting costs remain a significant factor, with 73 percent of buyers saying transportation costs were important in the purchase decision process.
'Green' features also played a role, with 85 percent saying heating and cooling costs were important and 68 percent wanting energy efficient appliances.
Types of Homes Purchased
Eighty-percent of respondents purchased a detached single-family home, 7 percent a condo, 7 percent a townhouse or rowhouse and 6 percent some older kind of housing. The typical home had three bedrooms and two bathrooms.
Fifty-three percent of recent purchases were in suburb or subdivision, 18 percent in a small town, 16 percent were in an urban area, 11 percent in a rural area and 3 percent in a resort or recreation area. The median distance from the previous residence was 12 miles.
Eight-eight percent of respondents used real estate agents and brokers to purchase home, 7 percent purchased directly from a builder and 5 percent directly from the previous owner; 61 percent of buyers working with real estate professionals had a buyer representative arrangement.
Who is a Typical Home Seller?
A typical home seller was 53 years old and their income was $97,500. Sellers moved a median distance from 18 miles and their home was on the market for 5 weeks, down from 11 weeks in the 2012 study. Forty-five percent moved to a larger home, 27 percent bought a comparably sized home and 29 percent downsized. Thirteen percent of sellers wanted to sell earlier but were stalled because their home had been worth less than their mortgage.
The typical seller, who purchased a home nine years earlier, realized a median equity gain of $25,000, a 13 percent increase over the original purchase price, while sellers who were in their homes for 11 to 15 years saw a median gain of $52,000 or 28 percent.
Sellers typically found a real estate agent through a referral by a friend, neighbor or relative, or used the agent in a previous transaction, together cited by 63 percent of respondents; 83 percent are likely to use the agent again or recommend to others.
Like sellers, buyers most commonly choose an agent based on a referral, or had used the agent previously, mentioned by 54 percent of respondents, with trustworthiness and reputation being the most important factors; two out of three buyers interviewed only one agent. Eighty-six percent of buyers are likely to use the same agent again or recommend to others.
Of sellers working with real estate agents, the study found that 81 percent used full-service brokerage, in which agents provide a broad range of services and manage most of the aspects of selling a home. Nine percent of sellers choose a limited set of services, and 10 percent used minimal service, such as simply listing a property on a multiple listing service.
For-Sale-By-Owner transactions accounted for 9 percent of sales, matching the record lows set in 2010 and 2012; the record high was 20 percent in 1987.
Factoring out private sales between parties who knew each other in advance, the actual number of homes sold on the open market without professional assistance was 6 percent. Twelve percent of all FSBOs said they had been contacted directly by a buyer and were not actively attempting to sell their home.
The median sales price for owners who used an agent was $230,000, well above the $184,000 median for a home sold directly by an owner, but there were important differences. The median income of FSBOs was $86,200 in contrast with $99,900 for agent-assisted sellers, and they were more likely to be selling a smaller home, suggesting a lower home value for unassisted sellers.
The most difficult tasks reported by FSBOs are getting the right price, preparing or fixing up the home for sale, and understanding and completing paperwork.

 What Home Buyers and Sellers Want You To Know About Them

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