I had full-on intent to write an article about the current economic uncertainty’s impact on the spring housing market, but digging into the economic data was, quite frankly, overwhelming and I’m still sorting through how best to present the information to you.
So I’m shifting gears and presenting data that I know you always find interesting – the Profile of Home Buyers and Sellers from last year. This data is collected by the National Association of Realtors® (NAR) for the time period between July 2023 and June 2024. When I use the phrase “last year” below, this period is the time I am referencing.
The Numbers
I think parsing through this information illuminates some of the underlying economics of the housing market and across the country. It also shines a spotlight on trends to watch and potential weak spots in the market. All the data in this post comes from the report linked above. The bright, witty, helpful commentary is comprised solely of my own thoughts, conjectures and opinions.
Most of this data is going to work with the “median” number. For those of us not into math the way the Mathematician is, I’ll remind us that the median is the method where you line all the numbers up and circle the one in the middle. The median tends filter out the noise of any crazy outlying numbers. E.g. if you’re working with a sequence of ages such as 22, 34, 37, 46 and 92 – the median age is 37 versus the average age is 46 (because that 92-year old is skewing the average high).
Digging into this data really raised my eyebrows. NAR began collecting the data for this report back in 1981 – over 30 years worth of data. There are multiple statistics that set new records, and not what I would consider to be in a positive manner. Let’s take a look, shall we?
Home Buyers
First-time home buyers accounted for 24% of buyers last year, the absolute lowest share of the market since NAR began reporting the data in 1981. For context, the year with the highest percentage of first-time buyers was 2010, coming in at a stunning 50% as buyers seized on the opportunity presented by cheap homes in the post-crash era. Since then, the statistic has been trending downward until it bottomed out last year.
The median age of the first-time buyer saw a pretty steep jump to 38 years old, up from 35 in 2023. Looking at the historic data, the median age had mostly hovered between 30 and 32, until we see it trend upward starting in 2019.
The median age of the repeat buyer also increased last year to age 61! Yes, that is not a typo. This figure has seen a more steady march upward than the first-time buyer. My conjecture is this piece of the data has been following the baby boomers upwards as they age. In 1981, the median repeat buyer was 36 years old and the data trends upward as they age. For reference, the Baby Boomers are currently age 60-79 so in my mind, this completely correlation tracks.
The Baby Boomers continue to be a force to reckoned with in the housing market. Many are making the move to main floor living to prepare for aging in place. Beyond purchasing their own homes, they are also helping children purchase or purchasing multigenerational-style homes so they can move in with adult children.
Interesting fact: 73% of home buyers did not have a child under the age of 18 in their home – another record-breaking statistic in this report. Inverted, we can say only 27% of buyers were families (of any variety) with minor children. Simply put, families with young kids are staying put, wherever they happen to be.
Financing
In terms of financing, 74% of buyers financed their home purchase with the remaining buyers 26% paying cash – another record breaking stat. Let me rephrase this one – twenty-six percent of buyers plunked down hundreds of thousands of dollars in cash to purchase a home during this time period.
There is some correlation here in my mind. Who is most likely to have cash like that available? Older buyers and to some extent, investors. All terms being equal, who is more likely to win a home in a multiple offer situation? Cash offers, as they are not subject to appraisal/financing contingencies and they can close in 7-10 days. These factors, in conjunction with affordability concerns, could be working in harmony to shut some first-time buyers out of the market.
For those who did use a mortgage to purchase, all buyers trended upward on the percentage of their downpayment. The median down payment was 18%. Buyers in all situations are bringing more cash to the closing table. Most likely this cash is an effort to combat the higher monthly payments driven by the current interest rates.
Tying back to my earlier comment on parents helping children purchase homes, 25% of first-time buyers used a gift or loan from a relative or friend towards the down payment.
Home Sellers
Home sellers set another record in this data set, with the “typical” age of the home seller placed at age 63. (“Typical” in quotes because the report doesn’t specify what metric they used, which has me all angsty.)
Sellers owned their home about 10 years before selling, same as last year. Median time the house sat on the market was three weeks. This stat is reflective of the seller’s market that was in play 2023-2024 across the country as we continued to experience a pretty extreme inventory shortage.
The final sales price was a median of 100% of the final listing price – which is a bit of a deceptive stat in my book. If I list your house in Dr. Evil terms for $1 million dollars, finally convince you to price the home appropriately at $500k and you accept a “full price” offer of $500k that’s a bit deceptive. Your sales price is 100% of your final listing price, but it’s only 50% of the original list price. (Rant over.)
The House
New construction accounted for 15% of home purchases, with the remaining 85% purchasing an existing home. Buyers of new construction were mostly focused on avoiding renovations, and interestingly, problems with pluming or electricity. Buyers of existing homes considered them a better value over new construction (31%).
The buyer’s new home was about 20 miles from their previous home. This stat was a big drop from the 50 miles stat we saw during the height of covid in 2022. The typical home was built in 1994. This factoid is FASCINATING. The last two years placed the build year in the 1980s, which more closely aligns with the average age of the housing stock in the U.S. ( Yes, I have a loose definition of the word “Fascinating”).
“Forever home” buyers were out in force, with buyers expecting to live in their new homes for a median of 15 years, with a full 25% of buyers declaring they were “never moving.”
Role of the Agent
A full 90% of sellers worked with an agent or broker to sell their home. Of those, 66% used an agent which was referred to them (ahem, ahem) or that they had worked with previously.
For buyers, 88% worked with an agent or broker, looking for help finding the right home to purchase and negotiating the terms of the sale.
For Sale By Owner (FSBO) sellers made up about 6% of sales, a historic low. Of these, 38% sold to a relative, friend or neighbor. FSBO homes had a median sales price of $380k vs $435k for the median price of all homes in 2023.
Recap
Overall, there continues to be areas of the country which are extremely competitive due to the low inventory. Buyers are still looking, but they are bringing larger down payments or full-on cash offers to the negotiating table. The average age of all buyers continues to trend upwards, with first-time buyers making up a smaller fraction of purchases than any time in the last three decades.
Sellers are staying in the homes longer than we have seen in the recent past, likely locked in by low interest rates on their current home and low inventory on homes they would like to buy. My personal experience in the market is that last year we were really looking at the real estate industry’s bread-and-butter clients pushed to buy or sell based upon their current life circumstances. We call them the 5 Ds: diamonds, diapers, divorce, downsizing and death.
On that cheery note, thank you for joining me this week. As always, I’m here to help if you have any homeownership questions!
