Orlando, FL, November 8--A large pool of first-time homebuyers, who account for four out of 10 home purchases, provide liquidity to the housing market and make it easier for existing owners to trade up or trade down, according to a new survey of home buyers and sellers released today by the National Association of Realtors.
The 2004 National Association of Realtors Profile of Home Buyers and Sellers, based on transactions from mid-2003 to mid-2004, is the latest is a series of surveys evaluating marketing, demographics and other characteristics of home buyers and sellers.
David Lereah, NAR's chief economist, said the market share of first-time buyers has been stable since 1993. "Strong activity by entry level buyers has provided solid and substantial growth to the housing market over the last decade," Lereah said.
"The demographics of our country favor this trend going forward because echo-boomers, the children of the baby boom generation and almost as large, will be in the prime years for buying a first home for the next decade. These findings demonstrate a fundamental underlying demand that will be driving the housing market at a higher plateau for the foreseeable future."
The typical first-time buyer is 32 years old, has a household income of $54,500 and makes a downpayment of three percent on a home costing $139,000. The typical repeat buyer is 45 years old with a household income of $79,100 and places a downpayment of 22 percent on a home costing $209,000. In all, 94 percent of buyers believe their home purchase is a good financial investment.
The level of for-sale-by-owners (FSBOs) hasn't changed since 2003, with 14 percent of sellers conducting transactions without the assistance of a real estate professional. The FSBO market share has fallen from a cyclical high of 18 percent in 1997. Thirty-two percent of sellers who sold their home without a real estate agent knew the buyer in advance, meaning that about one-third of FSBO transactions are not placed on the open market.
The median selling price of a home sold directly by an owner was 15.4 percent less than agent-assisted transactions. "It appears that sellers wanting to save money by not using an agent may be losing money in lower sales prices, despite the fact many FSBO homes might be smaller," Lereah said.
The survey found that the biggest problem areas for FSBOs were getting the right price, prepping the home for sale, and understanding and completing paperwork. Half of recent FSBOs said they would sell their current home without the assistance of an agent in the future, while 34 percent were unsure of what they'd do.
A great percentage of buyers are finding agents the traditional way: 44 percent were referred by a friend, neighbor or relative, 13 percent used an agent from a previous transaction, and eight percent saw contact information on a "for sale" sign. Seven percent found an agent on the Internet, six percent met at an open house, and five percent each walked into a real estate office or were referred by another agent or broker. Five other categories accounted for smaller shares each.
The most important factor in choosing an agent was reputation, according to 42 percent of buyers, followed by that agent's knowledge of the neighborhood, 24 percent. Of buyers who use an agent, 64 percent choose a buyer representative. Satisfaction with real estate agents is very high, with knowledge of the purchase process, knowledge of the local market, knowledge of the local area, people skills, and responsiveness each generating responses of "very satisfied" by eight out of ten buyers. Eighty-four percent said they were likely to use the agent again or recommend theirs to others.
Seller responses were fairly comparable, with eight out of ten selling through a real estate agent. Thirty-eight percent chose agents based on a referral by a friend, neighbor or relative, and 31 percent used the
