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According to a recent survey by the National Association of Realtors® (NAR), the typical U.S. homebuyer spent less and borrowed less in 2011. These and other metrics of home buying were gathered in the NAR's annual Profile of Home Buyers and Sellers released Friday at the Realtors' 2011 Conference and Expo in Anaheim, California.
The survey behind the Profile has been conducted for many years by way of a survey instrument mailed to recent home buyers. Because the purchased properties are not the principal residence, NAR cautions that surveys frequently do not reach the investors and they are under-represented in the results.
This year the survey found that first time buyers, who made up 37 percent of the market, down from an historic 40 percent share, had a median age of 31 and income of $62,400, up from $59,900 in the 2010 study. This buyer typically bought a 1,570 square foot home for $155,000, taking on a median monthly mortgage principal and interest payment of $794. The typical repeat buyer was 53 years old, earned $96,600 (up from a $87,000 reported last year) and purchased a 2,100 square foot home for $219,500 with a median payment of $1,006.
Seventy-seven percent of respondents purchased a detached single-family home, 9 percent a condo, 8 percent a town or row house and 6 percent some other kind of housing. Despite the difference in square footage, the typical home for both groups of buyers contained three bedrooms and two baths.
The median down payment for all buyers was 11 percent, however for first-time buyers it was 5 percent and for repeat buyers 15 percent. In both cases the median was a full percentage point higher than in 2010. Fifty-four percent of first-time buyers financed with a low-downpayment FHA mortgage, and 6 percent used the VA loan program which requires no downpayment.
Paul Bishop, NAR vice president of research said "The downpayment size for both repeat buyers and first-time buyers was a full percentage point higher than in the 2010 study, [is] another indication of tighter lending requirements."
Bishop said of these requirements, "The bar has been raised to qualify for a loan. Buying your first home has never been particularly easy, but with record-high housing affordability conditions and a pent-up demand, we normally would expect a stronger performance. This underscores how important it is to open the credit spigot for creditworthy buyers - banks simply need to get back into the business of lending. Higher home sales would help create jobs through related economic activity."
"The median price paid by repeat buyers in the survey was 2.1 percent higher than in the 2010 study, but their income was 11.0 percent greater, despite lower interest rates. First-time buyers paid 1.9 percent more, but their income was 4.2 percent higher," Bishop added.
First-time buyers who financed their purchase used a variety of resources for the downpayment: 79 percent tapped into savings, 26 percent received a gift from a friend or relative, typically from their parents, and 7 percent received a loan from a relative or friend. Nine percent sold stocks or bonds and 8 percent tapped into a 401(k) fund. Ninety-four percent of entry-level buyers chose a fixed-rate mortgage.
Buying patterns remained essentially unchanged from earlier surveys. Buyers typically looked at a median of 12 homes over a period of 12 weeks and used a combination of resources in their search. Eighty-eight percent used the internet and 7 percent a real estate agent; 55 percent used yard signs, 45 percent attended open houses, and 30 percent read newspaper ads. A buyer typically starts on-line and then contacts an agent.
Fifty-one percent of all homes purchased were in a suburb or subdivision, 18 percent were in an urban area, 18 percent in a small town, 11 percent in a rural area and 3 percent in a resort or recreation area. The median distance from the previous residence was 12 miles, the same as in the 2010 study.
More than half of buyers considered purchasing a foreclosure but didn't buy one for a variety of reasons: 29 percent couldn't find the right house; 15 percent each reported poor condition and a difficult process.
Sixty-four percent of all buyers are married couples, 18 percent are single women, 10 percent single men, 7 percent unmarried couples and 1 percent other. Last year 58 percent were married couples, 20 percent single women, 12 percent single men, 8 percent unmarried couples and 1 percent other. "The growth in married couples suggests buyers with dual incomes are better positioned to qualify for a mortgage in this tight credit environment," Bishop said.
The typical home seller was 53 years old and their income was $101,500. Sellers moved a median distance of 20 miles and their home was on the market for 9 weeks, up from 8 weeks in the 2010 profile. Forty-six percent moved to a larger home, 31 percent bought a comparably sized home and 23 percent downsized. Sellers had been in their homes for a median of nine years compared to eight years in the 2010 survey.
For-sale-by-owner transactions accounted for 10 percent of sales, above the record-low 9 percent in the 2010 study, but well below the record high of 20 percent set in 1987. The share of homes sold without professional representation has trended lower since last reaching a cyclical peak, which was 18 percent in 1997.