Dual income households helping US residential market to recover, research shows
|Tuesday, 13 November 2012|
Dual income households are comprising a greater portion of the US housing market and helping sales recover, according to an annual study from the National Association of Realtors.
It shows that some 65% of all buyers are married couples, 16% are single women, 9% single men, 8% unmarried couples and 2% other. Percentages of single buyers were slightly higher in 2011.
Paul Bishop, NAR vice president of research, said the study is painting a clearer picture of the impact of mortgage limitations. ‘We’ve known for some time that stringent mortgage credit standards have been holding back home sales, but these findings show single buyers have been hurt the most over the past two years. Total home sales would be 10 to 15% higher without these unnecessary headwinds,’ he explained.
‘The continued growth in married couples as single buyers shrink demonstrates that households with dual incomes are more successful in obtaining a mortgage. However, given the historically favourable housing affordability conditions, most single income buyers could also purchase a home and stay well within their means, if lending requirements were more sensible,’ he added.
First time buyers edged up to a 39% market share in the past year from 37% in the 2011 study. Long term survey averages show that four out of 10 buyers are typically first time buyers, who are critical to a housing recovery because they help existing home owners to sell and make a trade.
The study also shows the median age of first time buyers was 31 and the median income was $61,800. The typical first time buyer purchased a 1,600 square foot home costing $154,100, while the typical repeat buyer was 51 years old and earned $93,100. Repeat buyers purchased a median 2,100 square foot home costing $220,000.
The median down payment for all home buyers was 9%, ranging from 4% for first time buyers to 13% for repeat buyers. ‘First time buyers historically make small down payments, but repeat buyers like to put down 20% if they can to avoid paying mortgage insurance,’ Bishop said.
First time buyers who financed their purchase used a variety of resources for the down payment. Some 76% tapped into savings, 24% received a gift from a friend or relative, typically from their parents and 6% received a loan from a relative or friend.
Some 93% of entry level buyers chose a fixed rate mortgage, 46% of first time buyers financed with a low down payment FHA mortgage, and 10% used the VA loan programme with no down payment requirements.
The research also shows that 42% cut spending on luxury items to buy their first home, 35% cut spending on entertainment and 27% cut spending on clothes.
Overall 78% of recent home buyers said their home is a good investment, 46% believe it’s better than stocks and 92% were satisfied with the buying process.
The typical buyer began their home search online and then contacted a real estate agent. Buyers who used an agent searched a median of 12 weeks and visited 10 homes, down from 12 homes in 2011.
‘The decline in the number of homes visited reflects a tighter inventory environment that became more pronounced during the second half of the survey period. It makes sense that buyers are seeing fewer homes in the current market,’ said Bishop.
Buyers use a wide variety of resources in searching for a home. Some 90% use the internet, 87% use real estate agents, 53% for sale signs, 45% attend open houses and 27% review print or newspaper adverts.
Also 91% of buyers who used the internet to search for a home purchased through a real estate agent, as did 71% of non internet users, who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.
While sellers had been in their previous home for a median of nine years, first time buyers plan to stay for 10 years and repeat buyers plan to hold their property for 15 years.
The biggest factors influencing neighbourhood choice were quality of the neighbourhood, cited by 61% of buyers, convenience to jobs at 43%, overall affordability of homes 39% and convenience to family and friends 35%.
Other factors with relatively high responses include neighbourhood design and convenience to shopping, 26% each, quality of the school district 25%, convenience to schools 22% and convenience to entertainment or leisure activities 19%.
Some 79% of respondents purchased a detached single family home, 8% a condo, 6% a town house and 7% some other kind of housing. The typical home had three bedrooms and two bathrooms.
The typical home seller was 53 years old and their income was $95,400. Sellers moved a median distance of 19 miles and their home was on the market for 11 weeks. Some 46% moved to a larger home, 29% bought a comparably sized home and 25% downsized.
Like sellers, buyers most commonly choose an agent based on a referral, with trustworthiness and reputation being the most important factors. Two out of thee buyers interviewed only one agent and 89% of buyers are likely to use the same agent again or recommend to others.
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