PROFILE OF US HOME OWNERS

Posted by Lise | Filed under: Sellers

Home buyers today have affirmed a long-term view of home ownership: the typical seller is experiencing positive returns and the vast majority of home owners see their property as a good investment, according to the latest consumer survey of home buyers and sellers. The study was released at the 2010 REALTORS® Conference & Expo.

The 2010 National Association of REALTORS® Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, preferences, marketing and experiences of recent home buyers and sellers.

Although typical sellers had been in their previous home for eight years, up from seven years in the 2009 study, first-time buyers plan to stay for 10 years and repeat buyers plan to hold their property for 15 years.

Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.

“Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase,” said Vicki Cox Golder (2010 NAR President). “Despite swings in the housing market in recent years, the fact is most long-term owners see healthy gains in the value of their property.”

House flipping is virtually nonexistent in today’s market. “The primary exception is for experienced investors, many of whom pay cash and are making renovations or improvements after a careful study of properties, neighborhoods and market demand,” Golder explained. “The house flipping and quick gains which occurred during the boom period were abnormal, driven by risky, easy-money financing that should never have been allowed in the market.”

Paul Bishop, NAR vice president of research, said the lion’s share of buyers view their home as a good investment. “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks,” he said. “Even with the turmoil created by the housing boom and bust, this indicates the long-term view of home ownership as a fundamental goal and value remains sound. In fact, the single biggest reason most people buy a home is the simple desire to own a home of their own, cited by 31 percent of respondents, including 53 percent of first-time buyers.”

The next biggest reasons for buying, identified by all home buyers, were desire for a larger home, 9 percent; a change in family situation and the home buyer tax credit, cited by 8 percent each; a job-related move, 7 percent; and the affordability of homes, 6 percent. Twelve other categories were 5 percent or less.

The number of first-time home buyers rose to a record high 50 percent of all home sales from 47 percent in the 2009 study, building on success of the home buyer tax credit which began in 2009. The previous cyclical high for first-time buyers was 44 percent in 1991; records date back to 1981.

The profile shows the median age of first-time buyers was 30 and the median income was $59,900. The typical first-time buyer purchased a 1,540 square foot home costing $152,000, with 93 percent using the first-time buyer tax credit.

First-time buyers who made a downpayment used a variety of sources: 74 percent used savings, 27 percent received a gift from a friend or relative, typically from their parents, and 9 percent received a loan from a relative or friend. Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-five percent chose a fixed-rate mortgage.

The shares of entry-level buyers receiving a gift or loan were modestly higher than 2009 when 22 percent received a gift and 6 percent a loan from a relative or friend. “It appears more parents were motivated to help their children to take advantage of the home buyer tax credit and very favorable affordability conditions,” Bishop said.

Fifty-six percent of entry level buyers financed their purchase with an FHA loan, while another 7 percent used the VA loan program. Forty-two percent said financing their first home was more difficult than expected and 9 percent had been rejected by a lender.

Fifty-eight percent of all buyers are married couples, 20 percent are single women, 12 percent single men, 8 percent unmarried couples and 1 percent other.

Bishop noted that women buyers have accounted for roughly one out of five transactions since the late 1990s, and single men have been at the one in 10 level since 1981. “A modest increase in the share of single men buyers may result from the home buyer tax credit, but this is the highest share for single men in the history of the study,” he said.

Buyers searched a median of 12 weeks and viewed 12 homes. Fourteen percent of buyers own two or more homes.

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32 Responses

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