Your Full Time Realtor
Survey Shows First-Time Home Buyers Set Record in Past Year
First-time home buyers reached the highest market share on record during the past year, according to the latest consumer survey of home buyers and sellers. The study was released here today at the 2009 REALTORS® Conference & Expo.
The number of first-time home buyers rose to 47 percent of all home sales from 41 percent of transactions in last year’s study, and was the highest on record dating back to 1981. The previous high was 44 percent in 1991. “It’s interesting to note the last cyclical peak of first-time home buyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession,”
The profile shows the median age of first-time buyers was 30 and the median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study, and plans to stay in that home for 10 years.
First-time buyers who made a downpayment used a variety of sources: 61 percent used savings and 22 percent received a gift from a friend or relative, typically from their parents. Six percent received a loan from a relative or friend, 6 percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-six percent chose a fixed-rate mortgage.
First-time buyers often make financial sacrifices to purchase a home: 39 percent cut spending on luxury items, 38 percent cut back on entertainment and 30 percent cut spending on clothes.
Only 12 percent said financing their first home was more difficult than expected, but 13 percent of successful buyers said they had experienced a purchase agreement that was canceled, terminated or fell through; and 8 percent had been rejected by a lender. “This raises the question of how many potential buyers were unsuccessful because of problems with appraisals or loan qualifications,”
Eighty-five percent of sellers used a real estate professional, and 64 percent of sellers chose their agent based on a referral or had used the same agent in the past. Eighty-one percent of sellers are likely to use the same agent again or recommend to others.
Forty-two percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 95 percent of the listing price, with a median increase over the seller’s original purchase price of $36,000. “Even with price declines in recent years, the typical home seller saw their equity increase 27 percent,” McMillan said.
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Mike O'Donnell
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realtormurfreesboro.com
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