Eighty-five percent of recent home buyers see their home as a good investment according to NAR survey

 

Dennis Norman St Louis

Dennis Norman

The National Association of REALTORS® just released their 2010 Survey of Home Buyers and Sellers which shows that people still look at home ownership as a good long-term investment and the typical seller is experiencing positive returns from home ownership.

Highlights from the survey:

  • 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.
  • Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks.
  • 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.
  • 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.
  • 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.
  • 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.
  • Buyers searched a median of 12 weeks and viewed 12 homes.
  • Fourteen percent of buyers own two or more homes.
  • The typical repeat buyer was 49 years old, earned $87,000, and purchased a 2,000 square foot home costing $215,000.
  • The median downpayment of all home buyers was 8 percent, ranging from 4 percent for first-time buyers to 14 percent for repeat buyers.
  • The median age of home sellers was 49 and their income was $90,000. Sellers moved a median distance of 18 miles and their home was on the market for 8 weeks, down from 10 weeks in the 2009 survey. Half traded up in size, 28 percent bought a comparably sized home and 21 percent traded down.
  • Sixty-four percent of sellers chose their agent based on a referral or had used the same agent in the past. Reputation was the most important factor in choosing an agent, cited by 35 percent of respondents, followed by trustworthiness at 23 percent. Eighty-four percent of sellers are likely to use the same agent again or recommend to others.
  • Forty-four percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 96 percent of the listing price, compared with 95 percent in the 2009 profile.
  • Buyers use a wide variety of resources in searching for a home: 89 percent surf the Internet, 88 percent use real estate agents, 57 percent yard signs, 45 percent attend open houses and 36 percent look at print or newspaper ads. Although buyers also use other resources, they generally start the search process online and then contact an agent.
  • When asked where they first learned about the home purchased, 38 percent of buyers said the Internet; 37 percent of buyers from a real estate agent; 11 percent a yard sign or open house; 6 percent from a friend, neighbor or relative; 4 percent home builders; 2 percent a print or newspaper ad; 2 percent directly from the seller; and less than 1 percent from a home book or magazine.
  • Eighty-five percent of home buyers who used the Internet to search for a home purchased through a real estate agent, while 70 percent of non-Internet users were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.
  • Seventy-seven percent of all buyers purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 6 percent some other kind of housing.
  • For-sale-by-owner transactions reached a record low, accounting for 9 percent of sales in the 2010 study, down from 11 percent in 2009.
  • The most difficult tasks reported by unrepresented sellers are getting the right price, preparing and fixing the home for sale, understanding and performing paperwork, and selling within the planned length of time.
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