If the real estate market’s fragile recovery turns into a full-fledged rebound in 2010, much of the credit will go to first-time home buyers who are playing a leading role in the housing market’s gradual resurgence.
First-time buyers jumped to their highest market share on record last year with the group accounting for 47 percent of all home sales nationwide, up from 41 percent the previous year, according to a new survey by the National Association of Realtors.
As NAR’s vice president of research, Paul Bishop, pointed out, first-time buyers “are critical to housing and a general economic recovery because the market always heals from the bottom up.”
By purchasing homes, newcomers absorb excess inventory of properties, free up existing homeowners to trade up to larger and more expensive homes, allow elderly homeowners and empty nesters to downsize into smaller properties, and stimulate sales of related goods and services, everything from home remodeling to new appliances.
It’s not surprising that first-time buyers jumped into the market in a big way last year. All the moons were in alignment for these fortunate consumers. There had been several years of pent up demand, finally unleashed by a very attractive federal tax credit. They also enjoyed record-low interest rates and some incredible prices in the marketplace.
So who are these first-time buyers? The NAR survey gives us a good profile, showing that their median age is 30, they earn a median $61,600 a year, and the typical home they purchased cost $156,000. They made the downpayment using a variety of sources, including their personal savings (61 percent) and a gift from parents, family or friends (22 percent).
Besides examining first-time home buying trends, NAR’s annual survey also gives us a good look at all home buyers and sellers, including their preferences, how they found the right home for them, and what’s important when it comes to buying or selling real estate.
If you’ve bought a home recently, you probably know that the Internet and technology are playing greater roles in real estate. But just how much was underscored by the 2009 survey, which found that nine out of every 10 buyers used the Internet in their search. That’s up from 77 percent just three years ago and less than 10 percent a decade ago.
When asked where they first learned about the home they ultimately purchased, 36 percent of home buyers pointed to the Internet, up from 24 percent of buyers a few years ago and less than 10 percent a decade ago.
But while the Internet’s importance in the home search process can’t be minimized, it’s interesting to note that the vast majority of buyers are still relying on the expertise of a professional Realtor to purchase a home. The survey found that a full eight out of 10 buyers who used the Internet ended up purchasing their home through a real estate agent.
Home buyers said Realtors served a critical role, not just in finding the right house, but in negotiating the sales terms and final price. They pointed to a variety of benefits they received from professional agents, including understanding the complex home buying process, pointing out unnoticed features or faults, and negotiating better contractual terms.
Other interesting results of the survey included:
- Many buyers – first timers and repeat buyers alike – took advantage of distressed property sales last year with 10 percent purchasing a home in foreclosure, more than triple the number from 2008;
- Single women are buying homes in greater numbers. Some 21 percent of recent buyers were single females, more than double the number of single men. Married couples represented 60 percent of buyers;
- Some 78 percent of those surveyed purchased a detached single-family home, 9 percent a condominium, 8 percent a townhouse or row house, and 5 percent some other type of home;
- The typical repeat buyer was 48 years old (compared to 30 years old for first-timers), earned $88,100 a year (vs. $61,600), and purchased a home costing $224,500;
- Buyers searched a median of 12 weeks and viewed a dozen homes before settling on one, and the typical home purchased was 1,800 square feet and built in 1991;
- The biggest factors influencing where buyers purchased were quality of the neighborhood (64 percent), convenience to jobs (50 percent), overall affordability of homes, and convenience to family and friends;
As the NAR survey shows, the real estate industry continues to change and evolve, thanks to changing consumer expectations, technological advances, and, of course, the challenging economy.
But one thing that remains constant is the value consumers place on owning a home of their own, a piece of the American Dream. And with that, the importance of working with an experienced, professional agent who knows their market and can help make their dream of homeownership a reality.