The share of first-time homebuyers dropped to less than 4 in 10 of all home sales from July 2010 through June 2011, after hitting a record high of 50 percent the year before, according to an annual National Association of Realtors survey of buyers and sellers.
The share of first-timer buyers, 37 percent, is the lowest rate since 2006 at the height of the housing boom. The South and Midwest had the smallest share of first-timers, 34 percent, while the Northeast had the biggest share, 43 percent. The West had a share of 42 percent in the 2011 report.
Source: National Association of Realtors.
The 2011 NAR Profile of Home Buyers and Sellers is based on 5,708 responses to a survey sent to homebuyers and sellers nationwide whose transactions took place between July 2010 and June 2011, according to county records. The period examined matches the time directly following the expiration of a federal homebuyer tax credit program, which fueled sales from first-time homebuyers in the 2010 report.
"The end of the homebuyer tax credit in 2010 coincided with increased lending standards for homebuyers. The combination of these two events changed who is buying a home and why they are purchasing a home in the last year. First-time homebuyers dropped from half of all buyers to just over one-third of homebuyers," the report said.
"The demographics shifted to buyers who were older and had higher incomes than buyers in past years. There was also a reversal of a 10-year trend of more single buyers in the market to a higher share of married-couple buyers than was seen since 2001."
In this year’s report, the typical buyer was 45, compared with 39 in the 2010 report. While the largest share of buyers remained in the 25 to 34 age range, they made up only 27 percent of buyers overall compared with 36 percent in 2010 report. Buyers under 35 accounted for 31 percent of purchases in this year’s report, while those aged 35-64 made up 57 percent of sales and those aged 65 and older made up 13 percent.
The typical age for first-timers was 31, up one year from the 2010 report. The typical repeat buyer was 53, up from 49.
In terms of family composition, first-time buyers had a higher share of singles and unmarried couples among them, while repeat buyers were most likely to be married couples. First-time buyers and repeat buyers were equally likely to have children under 18 living at home, at 36 percent.
After two straight years of declines, median household income among buyers rose 12 percent in 2010 to $80,900, from $72,200 in 2009. For first-timers, median income was $62,400; for repeat buyers, it was $96,600.
"The increase in household income reflects the tightening credit conditions that homebuyers are facing," the report said.
Married, repeat buyers typically had the highest income among buyers, $110,800, while single female, first-time buyers had the lowest income, $46,300.
Married couples accounted for 64 percent of recent homebuyers — the highest share since 2001. This breaks a trend prevailing between 2001 and 2010 where the share of married couples fell from 68 percent to 58 percent, while the share of singles and unmarried couples among buyers rose. For example, the share of single female homebuyers fell to 18 percent in the 2011 report, the lowest share since 2004.
More than 4 in 10 buyers rented a home before buying, a trend most common among first-timers, but also true for about a fifth of repeat buyers. Married couples were most likely to own before buying, while unmarried couples were most likely to rent. Single men and women were most likely to live with parents, relatives or friends before buying a home.
Most buyers, 87 percent, financed their purchase, typically putting down 11 percent of the purchase price. For first-timers, that share rises to 95 percent who financed their purchase.
The main reason for buying a home, cited by 27 percent of buyers, was simply the desire to own a home. This sentiment was most prevalent among first-time buyers, while repeat buyers often cited life changes such as the desire for a larger home, a job relocation, change in family situation, or desire to be near family and friends.
Almost a fifth of buyers, 19 percent, owned more than one home, with the likelihood of owning a second home rising with age. One in 10 buyers 45 or older owned an investment property in addition to the home just purchased, the report said.
The typical home was 1,900 square feet, built in 1993, and had three bedrooms and two bathrooms. The size of the typical home rose considerably from 1,780 square feet in the 2010 report due to the increased prevalence of repeat buyers. Also due to an increased preference for larger homes, the median price of primary homes purchased increased to $191,000 from $180,000 in the 2010 report. The vast majority of buyers, 77 percent, purchased a detached single-family home.
Buyers typically moved a median 12 miles from their previous residence, unchanged from the 2010 report.
Typical buyers estimated they would live in their home for 15 years, up from 10 years in the 2010 report. That time period was shorter for first-timers who estimated they would live in the home for 10 years.
For 35 percent of buyers, the first step in their home-search process was to look online for properties. However, with a higher share of older, repeat buyers, use of the Internet during the process overall dipped slightly, to 88 percent, from 89 percent in last year’s report and from a high of 90 percent in 2009.
In their search for homes, in addition to the Internet, 87 percent of buyers used real estate agents, 55 percent used yard signs, 45 percent used open houses, and 30 percent used print newspaper advertisements. Real estate agents were deemed the most useful by buyers, followed closely by the Internet.
Ultimately, 40 percent of buyers found their home on the Internet, 35 percent through a real estate agent, and 11 percent through a yard or open house sign. The typical buyer searched for 12 weeks and viewed 12 homes, the report said.
The vast majority of buyers, 89 percent, were assisted by a real estate agent or broker when purchasing their home — a steady increase since 2001 when 69 percent were assisted by an agent, the report said.
The biggest share of buyers, 41 percent, found their agent through a referral from a friend or family member. Nine percent used an agent they had used before — the same share that found their agent through a website online.
About two-thirds of buyers interviewed only one agent before choosing one to work with, and nearly 9 in 10 said they would use their agent again or recommend him or her to others.
About the same share, two-thirds, of sellers also contacted one agent before choosing one to work with. The biggest share, 39 percent, found the agent through a referral from a family member or friend while 22 percent used an agent they’d worked with before. Overall, 87 percent of sellers were assisted by a real estate agent. Of the 10 percent of sellers who sold without an agent, 40 percent of them knew the buyer before the home was purchased.
The main reason given for not using an agent to sell to a buyer the seller did not know was to avoid paying a fee or commission.
The typical seller was 53 with an income of $101,500, the report said. About half of sellers traded up to a bigger, more expensive home, while 60 percent bought a newer home. The typical seller lived in his or her home for nine years, up from six years in 2007.