Between July 2020 and June 2021, U.S. homes sold at a record pace. However, many owners didn’t stay in their home as long, with average tenure dropping from 10 years in last year’s report to eight years this year. Still, 9 out of 10 buyers (87%) and sellers (90%) used an agent or broker.
WASHINGTON – Why did buyers and sellers choose to buy or sell this year? Many wanted to live closer to family and friends, and a similar number wanted a home with more space.
In a strong sign of a seller’s market, most earned their full asking price and went under contract in just one week.
Further sales figures appear in the National Association of Realtors®’ 2021 Profile of Home Buyers and Sellers, a yearly report – now in its 40th year – that analyses demographics, preferences and experiences of buyers and sellers across America.
Jessica Lautz, vice president of demographics and behavioral insights at NAR, says both buyers and sellers “have been driven by the desire to be close to family and friends, as well as the need for a larger home” during the pandemic. A bullet-point list of top findings by category is posted on NAR’s website.
Of those sellers who also became buyers, many traded up to bigger, more expensive and often newer homes, with 46% purchasing a larger home and 28% one of the same size.
Relocating to be closer to family didn’t start during the pandemic, but Lautz says the COVID-19 outbreak accelerated that trend. In past years, convenience to work and affordability had ranked as top factors for reasons to move.
The 2021 NAR report comprises a year of research on buyers and sellers who purchased or sold a home during the COVID-19 pandemic. In addition to various other findings, the pandemic likely spurred occupants to shorten their home stay, as tenure in the home decreased to eight years from 10 years, according to the report – the largest single-year change in home tenure since NAR began collecting such data.
In general, buyers expected to live in their homes for a median of 12 years, while 18% said that they were never moving. Historically, tenure in the home has been six to seven years, but it increased to nine to 10 years following the Great Recession.
“Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce or a new job,” says Lautz. “The pandemic has impacted everyone, and for many this became an impetus to sell and make a housing trade.”
The market over the last year saw homes reach record-high prices, paving the way for sellers to secure maximum profits on transactions as buyers grappled with historically high housing costs. As a result, most homebuyers typically paid 100% of the seller’s asking price, with one out of three (35%) paying more than the asking price. That 100% median is the highest recorded since 2002.
Home sellers sold their homes for a median of $85,000 more than their originally purchase prices, a jump from $66,000 last year.
“Buyers moving quickly during the pandemic, coupled with all-time-low inventory, led to a decline in time on market to the shortest ever recorded, which was just one week,” says Lautz. “Only a quarter of home sellers offered incentives to entice potential buyers, down from nearly half of all sellers the year prior.”
On average, buyers said finding a home to purchase took eight weeks, unchanged from last year, with 43% of buyers saying virtual property tour options were useful. For a second straight year, buyers said that finding the right home was “the most difficult task” in the homebuying process.
The first step taken by 41% of recent buyers? They looked online for properties but 19% said the first step involved contacting an agent.
Agents role in home buying
Most buyers and sellers eventually turned to a real estate agent or broker to assist in their home transaction: 87% of buyers purchased their residence through an agent or broker, and 7% bought directly from a builder or builder’s agent. Among home sellers, 90% worked with an agent, while 7% opted for-sale-by-owner sellers; less than 1% sold via an iBuyer.
Almost half of all buyers (47%) found their agent thanks to a referral by a friend, neighbor or relative, and 13% used an agent that they had already worked with on a past transaction.
Three out of four buyers (73%) of buyers interviewed only one real estate agent during their home search, and almost all (90%) said they would use that agent in the future or recommend the agent to others.
For sellers, 68% became acquainted with their agent via a referral or had used the agent before, and 82% said they contacted only one agent before finding “the right agent” to sell their property.
Of sellers who also planned to buy another home, 53% used the same agent for both transactions, and 89% would recommend that agent for future residential dealings. Typically, sellers have recommended their agent twice since selling their property, though 27% referred their agent four or more times since selling their home.
“Realtors stepped up in a tremendous way during this pandemic – both in helping sellers list and sell properties, as well as in aiding buyers in finding their dream home during a time of such scarce inventory,” says NAR President Charlie Oppler.”
The share of first-time homebuyers increased from 31% to 34% – the largest jump since 2017. The typical first-time buyer was 33 years old, the same as in 2020. But the typical repeat buyer’s age continued to climb, reaching an all-time high of 56 years old this year.
“As home prices increase, generally first-time buyers are hit hardest because they have no previous home on which to draw equity,” says Lautz. “Furthermore, in the current environment, these buyers also face soaring rent prices and high student debt balances, which make it extremely difficult to save for a down payment.”
One out of four (28%) of first-time buyers used a gift or loan from friends or family to make a down payment on a home, and 29% said saving for a down payment was the most difficult step in the entire buying process. For repeat buyers, 56% used equity generated from the sale of a primary residence toward their down payment. For first-time buyers, the typical down payment was 7%; for repeat buyers, it was 17%.
Fewer married homebuyers
NAR cites a “notable revelation in the report” – the slight decline in married homebuyers. This year’s data showed that 60% of recent buyers were married, but that share has fallen from a high of 81% in 1985.
However, the share of single women buyers increased to 19% from a recent low of 15% in 2014. The shares of single men and unmarried buyers remained at 9%, respectively.
© 2021 Florida Realtors®
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