Thirty-five years ago, the National Association of Realtors® introduced the first Profile of Home Buyers and Sellers. The year was 1981 and mortgage rates were over four times higher than they are today, and first-time buyers made up a much larger share of overall sales. While many home buyer and seller behaviors and preferences have changed, some have remained constant over the last 35 years.
"When the Profile of Home Buyers and Sellers made its debut 35 years ago, consumers and Realtors® navigated a much different real estate landscape. The internet hadn't been invented and the average monthly mortgage rate was 15.12 percent," said Kim Clark, Association Executive and Governmental Affairs Director of the Silver City Regional Association of Realtors. "One important constant during this time has been Realtors®' role as the leading advocate for homeownership and a trusted expert in helping buyers and sellers close the deal."
With the recent release of the 2016 survey, it's a great time to look at some of the data and trends in this year's edition and how they stack up to the last three-and-a-half decades.
The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.
After slipping for three straight years, the share of sales to first-time home buyers in the 2016 survey ticked up to 35 percent, which is the highest since 2013 – when it was 38 percent – and a revival from the near 30-year low of 32 percent in 2015. In the 35-year history of NAR's survey, the long-term average of first-time buyer transactions is 40 percent.
Married couples once again made up the largest share of buyers (at 66 percent) and had the highest income of $99,200. However, the survey revealed that single women made up more of the buyer share than in recent years, based on household composition. "After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases, the highest since 2011 at 18 percent," said Clark. This is compared to 35 years ago when single females represented 11 percent of purchases.
Despite the internet's growing popularity over the past 20 years, buyers and sellers continue to seek a real estate agent to buy or sell a home. "In NAR's 2016 survey, nearly 90 percent of respondents worked with a real estate agent to buy or sell a home. This has brought for-sale-by-owner transactions down to 8 percent, their lowest share ever for the second year in a row," said Clark.
Since NAR's inaugural survey, consumer preferences have evolved and housing costs have gotten more expensive. In 1981, the typical buyer purchased a 1,700-square-foot home costing $70,000 ($201,376 in inflation-adjusted dollars). In the 2016 survey, purchased homes were typically 1,650 square feet and cost $182,500.
In 1989, when NAR started collecting buyer data on down payments, first-time homebuyers financed their purchase with a 10 percent down payment and repeat buyers financed a loan with a 23 percent down payment. As low-down-payment mortgage programs entered the marketplace and credit standards eased, the typical amount of money put down fell to as low as 2 percent for first-time buyers both in 2005 and 2006. "For repeat buyers, the smallest median down payment was 13 percent both in 2012 and 2014, which is likely due to reduced equity in the home that was sold," said Clark.
In recent years, down payment amounts have remained mostly unchanged, coming in at 6 percent for first-time buyers the last two surveys and either 13 percent or 14 percent for repeat buyers in the past four surveys.
Contact the Silver City Regional Association of Realtors or visit www.silvercityreatltors.org to connect with a Realtor to learn more about buying or selling a home.