In reviewing 35 years of survey data on home buyers and sellers, the National Association of Realtors (NAR) announced five notable real estate trends.
The organization’s survey, called Profile of Home Buyers and Sellers, dates back to 1981 and is the longest-running series of national housing data evaluating the demographics, preferences, motivations, plans and experiences of home buyers and sellers.
Here are the key takeaways over the past 3 ½ decades:
- First-time home buying is down
Whether due to underemployment, being unable to save for a down payment because of the need to repay student debt and or holding off until marriage, first-time buyers in the 2015 survey represented the lowest share (32 percent) since 1987 (30 percent). The downward trend has continued into 2016.
Sales to first-time buyers peaked in 2010 and 2009 at 50 percent and 47 percent, respectively. The long-term average is 39 percent of sales after excluding the skewed data from those two peak years, which were influenced by the popular first-time homebuyer tax credit program available at the time.
- Buyers still use real estate agents, not just the Internet
When the organization first began asking survey participants about Internet usage 21 years ago, only 2 percent of buyers used the web during their home search. By 2005, usage rose to more than 75 percent of buyers, and since 2012 90 percent have used the Internet to search for a new home.
Despite the rise in Internet use, nearly 90 percent of respondents still worked with a real estate agent and last year, for-sale-by-owner transactions were down to their lowest share ever at 8 percent. After peaking at 14 percent in 2003 and 2004, for-sale-by-owner transactions haven’t risen above 9 percent since 2011, when they were at 10 percent.
- Buyers purchasing slightly bigger homes over time
The typical single-family home purchased in 1981 was 300-square-feet smaller (1,700 square feet) than in 2015, when the average size was 2,000 square feet, a size that has remained steady over several years. The low point in home size was in 1985, when the typical home was 1,650 square feet. After the average size gradually increased leading up to the boom years, the size of purchased homes scaled back as distressed sales and first-time buyer activity during the tax credit period made up a larger percentage of sales.
Recent claims that more homebuyers are either moving to large homes in the suburbs or to homes less than 500 square feet in size are not proving to be true. The data shows that since 2011, the median size of homes bought has been 2,000 square feet.
- Down payments have gone down over time, but not recently
At an average monthly mortgage rate of 10.62 percent, the typical first-time homebuyer in 1989 put 10 percent down on their home purchase. The amount rose to 23 percent for repeat buyers. As mortgage programs that allowed lower down payments entered the scene and credit standards were eased, the typical down payment fell to as low as 2 percent for first-time buyers, both in 2005 and 2006. For repeat buyers, the lowest median down payment was 13 percent both in 2012 and 2014, likely due to reduced equity in the home that was sold.
In recent years, down payment amounts have come in at 6 percent for first-time buyers and either 13 percent or 14 percent for repeat buyers.
- Home searches are taking longer
The data shows that the typical number of weeks it takes for a buyer to find a home has increased since the late 1980s. From 1987 until 2007, buyers typically searched seven or eight weeks before finding the home they bought. In 2008, that number rose to 10 weeks, and then the median length of time increased to 12 weeks through 2013 before falling back to 10 weeks in the past two years.