5 Trends You’ll Notice Among Your Clients
November 8, 2019
Who are your clients these days?
Snapshot of Buyers
- Average age: 47
- Median household income: $93,200
- Living situation: 61% married; 17% single females; 9% single males; 9% unmarried couples
- Demographics: 84% white; 7% Hispanic; 5% Asian; 4% African American; 3% other
- Average length of house hunt: 10 weeks (touring a median of 9 homes)
- Primary reason for purchase: Desire to own a home
- Most common house type purchased: Detached single-family home, 1,850 square feet, three bedrooms, two baths
- Median cost of home purchased: $257,000
- Most common method for finding real estate agent: Referral from friend, neighbor, or relative
Snapshot of Sellers
- Average age: 57
- Median household income: $102,900
- Living situation: 72% married; 16% single females
- Tenure in the home: 10 years (up from 6 years from 2001 to 2008)
- Median length of time on the market: three weeks
- Price sold: Median of 99% of the list price
- Median equity: $60,000 higher than what owner originally paid at purchase
- Incentives for buyers: 34% offered incentives, such as home warranty policies or assistance with closing costs
- Most common method for finding a real estate agent: Referrals from friend, neighbor, or relative, as well as repeat business
- Sellers’ high-priority tasks for agents: Market the home (21%); sell the home within a specific time frame (20%); price the home competitively (19%); help fix the home to prepare it for sale (16%); and find a buyer (13%).
Home buyers are ready to plant roots: Today’s buyers are young, multicultural, tech-savvy, and eager to buy a home as a personal investment, according to the National Association of REALTORS®’ 2019 Profile of Home Buyers and Sellers. Sellers, on the other hand, are already rooted, having lived in their current home an average of 10 years, NAR’s report shows. Sellers are equity-rich and rely on real estate professionals for guidance now more than ever before.
Five key themes emerged from NAR’s annual survey of recent home buyers and sellers, ranging from what buyers are looking for in a house to what both buyers and sellers expect from a real estate agent. NAR has been providing an in-depth analysis of home buyers and sellers since 1981. This year’s report is based on surveys of more than 5,800 consumers.
- Buyers, sellers turn to agents in record numbers. The internet hasn’t replaced real estate professionals. Eighty-nine percent of buyers—a record high for the report—say they used an agent to purchase a home. On the seller side, the share of For Sale by Owner transactions hovers at 8%, on par with recent years. “While the home search process has shifted toward digital technology, the need for a trusted real estate agent to help sell a home is still paramount,” NAR notes in its report. “Personal relationships and connections remained the most important feature of the agent-buyer/seller bond.”
- Unmarried buyers are on the rise. Young adults ages 25 to 34 make up a quarter of all home buyers, the largest share. Meanwhile, first-time buyers are getting older: The median age of this cohort rose to 33—the highest on record in the NAR survey. The median age of first-time buyers in 1981 was 29. While most people who buy together still wait for marriage, unmarried buyers make up a growing share of the market, 9% compared with 8% a year ago. Married buyers made up 61% of the market. That’s down from 73% in 1981. Single female buyers made up 17% of the market, while the share of single male buyers was 9%.
- Debt remains a hurdle to saving for a down payment. More than a quarter of buyers—28%—say they delayed their home purchase because of debt. The median amount of time homeowners spent saving for a down payment was four years, according to NAR’s survey. Many buyers cited saving for a down payment as the most difficult step in the homebuying process, indicating that student loans, credit card debt, and car loans diminished their purchasing power. The median down payment on a home purchase is 12% for all buyers. Broken out, the median down payment is 6% for first-time buyers and 16% for repeat buyers, according the report.
- Equity gains prove a boon to sellers. Higher home prices have translated into faster appreciation for homeowners. Sellers this year sold their homes for a median of $60,000 more than they paid at the time of purchase, up from $55,500 a year ago, NAR’s survey shows. Sellers who owned their home for six to seven years reported a median $72,200 gain, while those who sold after 21 years of ownership saw a median gain of $162,000.
- Inventory woes continue. “Due to suppressed inventory levels in many areas of the country, buyers are typically purchasing more expensive homes as prices increase,” the NAR report notes. The average number of weeks a buyer searched for a home was 10 weeks. New-home construction has failed to catch up to buyer demand, with the share of new-home sales falling to an all-time low of 13%, NAR reports. For comparison, new-home sales held steady at 16% from 2011 to 2015. Existing-home sales have edged up from 86% of the market last year to 87% this year. In 1981, new-home purchases comprised 18% of the market, while existing-home purchases made up 82%.
Updated: May 28, 2020