Many different types of individuals and families buy homes every year from college graduates acting on a dream, growing families needing to find more living space, to those who have owned multiple homes over the years and are now considering a maintenance-free senior community. Where do you fit into the larger scheme of things?

Where do you fit in?

The National Association of Realtors® (NAR) says that 2016 marked the best year for existing home sales in a decade with over 5.45 million existing single-family homes, townhomes, condos and co-ops sold, surpassing 2015’s sales of 5.25 million.[1] Additionally, over half million newly constructed homes sold.

Characteristics of Home Buyers

  • First-time buyers made up 35 percent of all home buyers.
  • The typical buyer was 44 years old.
  • The median household income was $88,500.
  • Sixty-six percent of buyers were married couples.
  • Seventeen percent were single females.
  • Seven percent were single males.
  • Eight percent were unmarried couples.
  • Eleven percent purchased a multi-generational, to take care of aging parents, for cost savings, and because of children over the age of 18 moving back home.
  • Eighteen percent were veterans, and 2 percent were active-duty service members.
  • Ninety percent of buyers identified themselves as heterosexual, 3 percent as gay or lesbian, 1 percent were bisexual, and 7 percent preferred not to answer.

Characteristics of Homes Purchased

  • Fourteen percent of homes purchased were new, and 86 percent were previously owned. Thirty-four percent of the new home buyers (14 percent total) said the reason was to avoid electrical or plumbing problems. Most buyers who purchased a previously-owned home said they wanted a better price.
  • Eighty-three percent of homes purchased were single-family with seven percent buying townhomes or another type.
  • Seniors represented fourteen percent of buyers, with 20 percent of them buying condos and 8 percent townhomes. The draw was maintenance-free living.
  • Typical homes purchased averaged 1,900 square feet, had three bedrooms and two baths.
  • Overall, buyers said they expected to live in their home for an average of 12 years, while 18 percent said they were never going to move.

The Home Search Process

  • The first step for 44 percent of buyers was searching online. Seventeen percent contacted a real estate agent first.
  • Seventy-nine percent found their real estate agent a valuable source of information. Eighty-six percent said they found useful information online, but also said that different websites had different information and that it could be very confusing.
  • Sixty percent of buyers were very satisfied with their recent home buying process.

Financing the Home Purchase

  • Eighty-eight percent of buyers financed their purchase, and the typical loan to value ratio was 90 percent. The typical loan to value for first-time buyers was 96 percent as compared to repeat buyers at 84 percent.
  • The source of down payments for sixty-one percent of buyers was savings, while 35 percent cited using the proceeds from the sale of a residence, which was the next most common source.
  • For 13 percent of buyers, saving for their down payment was the most difficult part of the entire process. Forty-nine percent said the major difficulty was student loans. Credit card debt and car loans also were cited.
  • Even with down payment challenges, 82 percent reported that home purchased were good investments.

Home Buying and Real Estate Professionals

  • Only 8 percent of buyers felt confident buying directly from a homeowner (FSBO), while 92 percent preferred working with a professional Realtor®.
  • Forty-two percent of buyers used an agent who was referred by a friend, neighbor, or relative and 11 percent used an agent they had worked with in the past.
  • Eighty-eight percent of buyers would use their agent again or recommend them to others.

You can’t afford not to buy a home

READ
The American Dream: Owning a Home

Whether your outlook is conventional, or you’re someone who likes thinking outside the box, you should investigate buying a home if you haven’t.

If you are paying rent, you probably can afford to buy. One of the benefits of homeownership is tax savings on mortgage interest. This alone usually makes up the difference between rent and a mortgage payment. The way to find out is to contact a lender and see what you can afford.

If you can’t afford the exact home you have dreamed about, you may want to start with a smaller version of that dream and build equity. Equity is like money in the bank. Every time you make a house payment instead of paying rent, you are building equity. When you are ready to move up, you’ll be ready.

If you don’t believe there’s a home out there that you can afford, you may not be serious about looking. Keep searching yourself, or enlist the services of a professional Realtor®. You want an agent that cares and is willing to work with you until the time is right. Look at it this way: you can’t afford not to buy a home.

The opinions expressed in these articles are not necessarily those of Executive Life Magazine or the ACA Business Club. Answers are general in nature and do not apply to actual transactions.

 

[1] National Association of Realtors® – 2016 Sales Best Since 2006 – https://www.nar.realtor/news-releases/2017/01/existing-home-sales-slide-in-december-2016-sales-best-since-2006