This week the National Association of Realtors released their 35th annual profile of home buyers and sellers. So what’s changed and what hasn’t among home buyers and sellers over the past 35 years?
Internet and Technology
Not surprisingly, one of the biggest changes is the use of the Internet by buyers looking for a home. In 1995, 2% of buyers used the Internet in their search for a home. By 2015, 92% of buyers used the Internet in their search. Today, buyers are able to view and even “walk through” homes from the comfort and convenience of their own living room or local coffee shop (even in another state), and can find comps as well as tax and neighborhood information instantly.
Of course the Internet has been a benefit for sellers too, with the ability to “show” your home via photos and video any time of day or night. Some owners of more expansive estates are even using drones to shoot stunning videos from the air. And automated showing software makes scheduling showings easier than ever for all parties.
First-Time Home Buyers
In 1981, the share of first time home buyers was 44%. By 2015 the share was down to 32%. First-time home buyers are very important drivers in the real estate industry. Just this month, the percentage of first time buyers is up to 34%, the highest share since 2012, which has significantly helped increase home sales for the month across the nation.
Interest Rates and Loan Terms
In 1986, the average rate for a home loan was 10% with 1.5 points. Required down payments were typically 20%. Compare that with rates that are currently below 4% for most properties with typical required down payments of 10% or lower. Today, there are also many more types of loans available in addition to the traditional 30 and 15 year fixed: 20 year loans, interest only loans, ARMs, construction loans and bridge loans are just a few alternatives.
Longer Search Time
Even with the convenience of the Internet, more types of loans and lower rates, the typical home search in 2015 took 30 percent longer than 20 years ago (10 weeks compared with 7 weeks). Why is this? Is there just too much information online to sort through? Are buyers choosier or sellers less willing to negotiate? Probably a little of all three reasons and more. 10 years ago, 59% of sellers took the first offer on their home, compared with 46% who do today. And a recent industry study found that sellers want to feel some type of connection to the buyers of their home, as evidenced by personal “buyer letters” that many buyers include with their offers in highly desirable neighborhoods.
In 1982, 82% of buyers purchased their home with a Realtor. By 2015, even with the increase of information online, 87% purchased their home with an agent. An honest, knowledgable agent can help sort through and make sense of the abundance of available information and help buyers find the perfect house for them.