The data for this report was collected from July 1, 2021 to June 30, 2022 by NAR (The National Association of Realtors).
The housing market has been pummeled with a shift from a low interest rate, low inventory environment accompanied by bidding wars, to a much higher interest rate with a continued low inventory environment.
This report covers only primary single family residence buyers.
1. Small towns and rural areas had an influx of buyers while suburbs and urban areas had a decrease in buyers.
The top three factors of home buyers were affordability, the neighborhood and the closeness to family and friends. By purchasing in a small town or rural area, some buyers were able to capitalize on all three of these criteria.
2. The percentage of first time buyers dropped substantially from a year ago.
During this period, buyers saw the lowest inventory level of homes for sale in the US since 1999. This lack of homes for sale and the increase in interest rates and home prices shut many first time home buyers out of the housing market
3. The age of both first time and repeat buyers hit an all time high.
For the previous three years the age of first time home buyers was 33 years. During the period surveyed it jumped to 36 years. Saving for a down payment was challenging for buyers. Factors impacting their ability to save included credit card debt, car loans, student loans, and higher interest rates. The age of repeat buyers also increased by three years to 56 years
4. The percentage of White and Hispanic/Latino buyers grew while Black/African American and Asian Pacific Island buyers decreased.
Because Black/African Americans pay more in rental costs, this holds them back from saving to buy their first home. White buyers are more likely to be repeat buyers who use the equity in their existing home to leverage them into another property.
5. The percentage of cash buyers increased from 17 percent to 27 percent in the past year.
The tremendous accumulation of housing equity of about $210,000 on average over the past decade has allowed homeowners to pay cash for their next home purchase. The migration of buyers to small towns and communities where prices are historically lower than in urban/suburban areas has helped the housing dollar of these repeat buyers go further, making cash purchases more possible. Only three percent of first time home buyers bought with cash, essentially unchanged from previous years.
6. First time home buyers expect to stay in their home 18 years, up from seven years in 2007.
With locked in interest rates and the purchase of a more affordable home outside the urban/suburban area, buyers skipped the starter home phase making it less likely they will sell soon.
7. Buyers are receiving down payment funds from a variety of sources.
Savings was their primary source of their down payment. Additional sources included a gift or loan from family, a loan from their cryptocurrency account, and a loan from their 401 K. Two percent of buyers sold their cryptocurrency to obtain a down payment on their house.
8. Many first time home buyers moved directly from their parents’ home into their own home.
By living with their parents twenty-seven percent of first time home buyers skipped rental increases, paid down their debt, worked on their credit scores and saved for a down payment.
9. Buyers used real estate agents to guide them through the home buying process.
Buyers desire realtors with integrity, honesty and a thorough knowledge of the home purchase process.