NAR report: One-third of first-time home buyers get help from family and friends
One out of every three buyers purchasing their first home accepted help from family and friends. Despite this assistance, the share of first-time homebuyers remained significantly below pre-recession levels.
These were some of the findings in the 2019 Profile of Home Buyers and Sellers, an annual report by the National Association of Realtors. This year's report was based on 5,870 survey responses from people who purchased a primary residence between July 2018 and June 2019.
First-time buyers accounted for one-third of all respondents. This share was unchanged compared to last year and well below the historic norm of 40 percent.
"Pre-recession, the number of first-time buyers was higher, in part, because buyers had more options," said John Smaby, president of the National Association of Realtors. "However, over the past few years, we have unfortunately experienced a scarcity in housing inventory, especially at the middle- and lower-end of the market."
The typical buyer was 47 years old and had a median household income of $93,200. The typical home they purchased was 1,850 square feet with three bedrooms and two bathrooms, with a median price of $257,000. The typical buyer also paid 98 percent of the asking price for the property.
The report suggested that a reduced inventory of homes for sale has put more pressure on buyers due to higher prices. This trend has also caused buyers to seek alternate ways to afford a home. Twenty-three percent had been living with a family member or friend before purchasing a home, offering more opportunity to save up funds; this was more than twice the historic figure of 12 percent.
Twelve percent of buyers purchased a multigenerational home. This arrangement was most likely to be the result of the household containing an aging parent (44 percent) or adult children (34 percent), but 29 percent said cost savings were part of their reasoning.
Fewer buyers were opting to buy newly constructed homes. These residences accounted for only 13 percent of purchases – a survey low. Thirty-nine percent of those who bought a new home said they wanted to avoid renovations or problems with their residence.
Cost was the most important consideration among buyers purchasing a previously owned home, with 33 percent saying they thought it was a better value. Among all buyers, the typical purchased home had been built in 1990.
Eighty-six percent of buyers financed their home purchase. First-time buyers typically made a down payment of just 6 percent, while repeat buyers usually put down 16 percent. Seventeen percent of all buyers, including one-quarter of first-time buyers, used an FHA loan for their purchase.
Sixty percent of buyers said they used money from savings for their down payment. Thirty-eight percent relied on funds from the sale of a previous residence.
Seventeen percent of first-time buyers were unmarried couples, a survey high. Four percent bought a home with roommates.
The National Association of Realtors noted how the median age for both first-time and repeat buyers has been increasing. The typical age of a first-time buyer reached a survey high of 33, while the median age of a repeat buyer held at a record high of 55.
Forty-four percent of buyers looked at real estate listings online as the first step of their home search, while 16 percent started by contacting a real estate agent. Buyers who relied on the internet typically spent 10 weeks searching for a home and visited 10 properties, while the typical buyer who did not use the internet found a home after four weeks and four visits.
The report suggested that the tighter inventory was leading to a more favorable market for home sellers. The median seller sold their home for 99 percent of their asking price and found a buyer within three weeks.
Sellers were also less likely to delay putting their home on the market because their mortgage was worth less than the home's value. Just 7 percent said they had done so, down from 9 percent in the 2018 survey.
The median seller was 57 years old and had a household income of $102,900. They had typically lived in a home for 10 years and sold their home for $60,000 more than they purchased it.
For the first time in the survey's history, a desire to move closer to family or friends was the top motivator for sellers to list their property. Sixteen percent gave this reason, compared to 13 percent who said their home was too small and 11 percent who relocated for a job.
Forty-eight percent said they bought a newer home than their previous residence, while 44 percent bought a more expensive one. Sellers between the ages of 18 and 34 were most likely to trade up to a pricier home, with a median increase of $110,000. Sellers ages 65 and older were most likely to buy a less expensive home.
For-sale-by-owner transactions accounted for 8 percent of all sales. These sales netted a median price of $200,000, or $80,000 less than those using a real estate agent. The report said 58 percent of FSBO sales sold in less than two weeks, with this quick turnaround often a result of the seller transferring the property to someone they knew.
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