According to the 2014 National Association of Realtors Profile of Home Buyers and Sellers, released two weeks ago, the typical home seller in 2014 is 54 years old, married, has a household income of $96,700 and lived in their home for 10 years before selling, setting a new high for tenure in home.
The report indicates that 17 percent wanted to sell earlier, but were underwater, up 4 percent from last year. NAR’s Chief Economist Lawrence Yun attributes the increase in seller’s age and tenure in home to rebounding home prices. “Faster price appreciation this past year finally allowed more previously stuck homeowners with little or no equity the ability to sell after waiting the last few years,” he said.
Sellers realized a median equity gain of $30,100 ($25,000 last year) – a 17 percent increase (13 percent last year) over the original purchase price. Sellers who owned their home for one to five years typically reported higher gains than those in their home for six to 10 years, “underlining the price swings since the recession,” the trade group asserts.
The median time on market fell to four weeks from five just last year, proving a continued tightening of inventory in various markets. Sellers moved a median distance of 20 miles and approximately 71 percent moved to a larger or comparably sized home.
How Did Sellers Find Their Agent?
Overall, 92 percent of homebuyers look for homes online, while 87 percent use the Web to find a real estate professional, according to the profile. Also interesting is that exactly half of homebuyers used apps on their phone or tablet in their home search, 48 percent used mobile or tablet search engines, 48 percent used yard signs and 44 percent went to open houses.
Despite tech startups hoping to disrupt the industry and cut agents out of the process, nearly all transactions are done through an agent, in fact, those who searched for homes online were actually more likely to purchase through an agent.
Unlike buyers who mostly find their agents through the Internet, three in five found theirs through a referral (by a friend, family or neighbor), or used the agent from their previous transaction.
Nearly 90 percent of sellers indicated they are likely to use their agent again or recommend him/her to others. In addition, about 88 percent of transactions in recent years have sold with the assistance of an agent, with FSBO sales accounting for only 9 percent of homes sold.
“The share of homes sold without professional representation has trended lower since reaching a cyclical peak of 18 percent in 1997,” stated the NAR report.
How Buyers Connect to Homes Online
Homebuyers do their research, and they rely on a bevy of sources. The challenge for the industry is to offer legitimate information and meet them where they shop.
But do buyers actually buy that home they found online? The NAR report indicates that 43 percent did buy a home they found online, but 33 percent found their home through a real estate professional, 9 percent from a yard sign or open house, 6 percent from someone they knew personally, 5 percent from a homebuilder, 3 percent directly from the seller and 1 percent from a print or newspaper ad.
In 2009, only 36 percent of shoppers located their future home online, so we should be fair and chalk this up to the improvements made in the real estate syndication space and data accuracy – it’s difficult to buy something that was sold months ago or didn’t exist in the first place.
How Many Homes Do Buyers See Before Buying?
In most markets, inventory levels were extremely tight earlier this year and still remain fairly tight, so buyers visited 10 homes and picked the winner two weeks faster than in 2013. With fewer homes for sale, the pressure is on to make a choice quickly, and getting it right is important, as first-time buyers plan to stay in their home for 10 years, while repeat buyers plan to stay put for 15.
NAR indicates that 89 percent were satisfied with the buying process. What has the remaining 11 percent dissatisfied? Was it the agent, the lending process, the difficult sellers, the circumstances behind moving? That remains unclear, but this level of satisfaction has hovered around the same point for years.
What Buyers are Looking for in 2014
The top consideration of all buyers is the quality of a neighborhood (69 percent), followed by convenience to their jobs (52 percent), affordability of homes (47 percent) and convenience to friends and family.
Less relevant to pulling the trigger, but still important, is a home’s convenience to shopping (31 percent), the quality of the school district (30 percent), neighborhood design (28 percent) and convenience to entertainment (25 percent). Buyers’ median distance from their previous residence was 12 miles.
NAR points out that transportation costs and “green” features are more relevant, with 70 percent of buyers indicating that transportation costs are important, and 86 percent stating that heating and cooling costs are important. Two in three said energy efficient appliances and lighting were important.
Fully 79 percent of buyers purchased a detached single-family home, 8 percent a townhouse, 8 percent a condo and 6 percent some other kind of housing. The typical home has three bedrooms and two bathrooms.
Half of all buyers purchased a home in a subdivision or suburb, 20 percent bought in a small town, 16 percent in an urban area, 11 percent in a rural area, and 3 percent in a resort/recreation area.