Real Estate Press Releases

NAR Home Buyer and Seller Survey Shows Rise in First-Time Buyers, Long-Term Plans

ORLANDO, Fla., Nov. 8

The 2008 National Association of Realtors(R) Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, marketing, preferences and experiences of home buyers and sellers.

Lawrence Yun, NAR chief economist, said a higher share of first-time buyers makes perfect sense, and it's a trend he expects to grow. "First-time buyers are much more flexible in entering the market because they aren't concerned about selling an existing home," he said. "Given low home prices, plentiful supply and affordable interest rates, it's been an optimal time for entry-level buyers with a long-term view.

"Considering the temporary first-time buyer tax credit and improvements to the FHA loan program, we expect stronger entry-level activity as the flow of credit improves -- that, in turn, should free more existing owners to make a trade in 2009."

The number of first-time buyers rose to 41 percent from 39 percent of transactions in last year's survey and 36 percent in 2006. "Although modest, this is a meaningful gain for the 12-month period ending at the close of June, and more recent independent data show a stronger uptrend in first-time buyers who are helping to reduce excess inventory," Yun said.*

According to the NAR study, the median age of first-time buyers was 30, down from 31 in 2007, and the median income was $60,600. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.

The median downpayment by first-time buyers was 4 percent, up from 2 percent in 2007; the number purchasing with no money down fell from 45 percent in 2007 to 34 percent in the current survey. "The study covers transactions through the middle of 2008, so we can assume the downpayment numbers have shifted recently because credit tightened and no-downpayment loans all but disappeared around the close of the survey," Yun explained.

Of first-time buyers who made a downpayment, 69 percent used savings and 26 percent received a gift from a friend or relative, typically from their parents. Another 7 percent received a loan from a relative or friend, while 16 percent tapped into a 401(k) fund, stocks or bonds. Ninety-two percent chose a fixed-rate mortgage.

NAR 2008 President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said consumers rely heavily on the expertise of real estate agents to navigate the market. "This is the biggest transaction most people are ever involved in, so the qualities they're looking for in a real estate agent include reputation, honesty, integrity and knowledge of the market," he said. "Both buyers and sellers want agents to provide context, advice and know-how. The vast majority would use their agent again or recommend their agent to others."

Only 1 percent of sellers chose an agent based on his or her commission. Forty-six percent report the real estate agent initiated a discussion of compensation, while 24 percent of sellers brought up the topic and the agent was willing to negotiate the commission or fee. Thirteen percent of sellers did not know commissions and fees are negotiable.

Nearly nine out of 10 home buyers and sellers would definitely or probably use the same agent again or recommend him or her to others, consistent with the 2007 findings. The survey shows that 81 percent of home buyers and 84 percent sellers used a real estate professional, comparable to 2007.

Thirty-eight percent of sellers found their agent as a result of a referral, while 26 percent used the agent in a previous home purchase. Similarly, 43 percent of buyers relied on referrals to find an agent, while 18 percent of repeat buyers used an agent from a previous transaction.

The percentage of buyers who purchased a home in foreclosure jumped to 6 percent of transactions in the 2008 survey from 1 percent in 2007. Another 38 percent of buyers considered purchasing of a home in foreclosure but did not, primarily because they could not find the right home.

Commuting costs factored greatly in neighborhood selection, with 41 percent of buyers saying they were very important and another 39 percent saying transportation costs were somewhat important. "Since fuel costs began rising in the latter part of the survey period, it's reasonable to assume they've become even more important to home buyers since," Yun said. "We've heard from our members that commuting costs are playing a bigger role in buyers' decisions."

Environmentally friendly features also were important, cited by 90 percent of buyers. Heating and cooling costs were of primary importance, followed by energy efficient appliances and energy efficient lighting.

Buyers searched a median of 10 weeks and viewed 10 homes. Of buyers who used an agent, 61 percent chose a buyer's representative. Nearly nine out of 10 consider their home a good investment, and almost half see it as a better investment than stocks. Fifteen percent of buyers own two or more homes.

The typical repeat buyer was 47 years old, earned $88,200, purchased a home costing $236,000 and plans to stay in that home for 10 years. Repeat buyers made a median downpayment of 15 percent, but 10 percent paid cash for their property.

The median age of home sellers was 47; income was $91,000. Three-quarters were married couples, had been in their home for six years and moved a median distance of 19 miles. Their home was on the market for eight weeks; 5 percent of sellers who also purchased a home reported selling their home in a short sale.

NAR Sales Down

NAR: January Existing-Home Sales Ease

( February 28, 2006) -- Sales of existing homes were down in January while home prices continued to appreciate at double-digit rates, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.8 percent to a seasonally adjusted annual rate1 of 6.56 million units in January from an upwardly revised pace of 6.75 million in December. Sales were 5.2 percent below the 6.92 million-unit level in January 2005.

David Lereah, NAR’s chief economist, said sales are tracking the trend in the association’s Pending Home Sales Index. “Our leading indicator, based on pending sales, has been trending down since hitting a record last August,” he said. “In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they’ll maintain a historically high pace.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.15 percent in January, down from 6.27 percent in December; the rate was 5.71 percent in January 2005. In November, the 6.33 percent fixed rate was the highest in over three years.

The national median existing-home price2 for all housing types was $211,000 in January, up 11.6 percent from January 2005 when the median was $189,000. The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Thomas M. Stevens from Vienna, Va., said home prices continue to show the long-term effects of tight supply. “Although housing inventory levels have been improving, it is far from being a buyer’s market in most of the country and we see the momentum of double-digit appreciation being sustained in home prices,” said Stevens, senior vice president of NRT Inc. “Even when home sales slow, they still supply solid returns. The longer you own, the bigger the gain.”

Total housing inventory levels rose 2.4 percent at the end of January to 2.91 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace.
Single-family home sales dipped 1.5 percent to a seasonally adjusted annual rate of 5.77 million in January from an upwardly revised 5.86 million in December, and were 4.8 percent lower than the 6.06 million-unit pace in January 2005. The median existing single-family home price was $210,500 in January, up 13.1 percent from a year earlier.