9 Buyer, Seller Trends Driving Home Sales

NAR’s 2024 Profile of Home Buyers and Sellers offers a mixed picture of who’s succeeding and struggling in the housing market.     It hasn’t been easy to be a home buyer over the past year, particularly for first timers who’ve faced elevated home prices, higher mortgage rates and slim inventory options. (Although, inventory has been improving lately). Home sellers, on the other hand, have had an easier time, continuing to leverage record equity to purchase their next home—often in cash. “The U.S. housing market is split into two groups: first-time buyers struggling to enter the market and current homeowners buying with cash,” says Jessica Lautz, deputy chief economist and vice president of research at the National Association of REALTORS®. “First-time buyers face high home prices, high mortgage interest rates and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers. Meanwhile, current homeowners can more easily make housing trades using built-up housing equity for cash purchases or large down payments on dream homes.” Here are a few takeaways from the NAR’s newly released 2024 Profile of Home Buyers and Sellers, a consumer survey that reflects completed transactions between July 2023 and June 2024. First-time buyers are retreating from the market. The share of first-time buyers has fallen to a historic low of 24%, according to NAR. Prior to 2008, first-time buyers comprised 40% of the market. First-time buyers, who do not have proceeds from another home sale to leverage, are finding it takes a lot more money to enter today’s housing market. Nearly half say high rent is hampering their ability to save for a down payment, followed by student loans and credit card debt. Those who can afford homeownership tend to be older than in the past: The median age of first-time buyers this year reached an all-time high of 38 years old (compared to those in their late 20s in the 1980s). They’re also coming up with higher down payments than in years past—a median of 9% (the highest recorded since 1997). What’s more, first-time buyers are increasingly relying on others to help them buy: 25% used a gift or loan from a relative or friend for their home purchase. Cash buyers have surged to a record high. More than a quarter—26%—of home buyers over the past year paid cash for their home purchase—an all-time high, according to NAR’s data. This enables these buyers to bypass a mortgage at a time when interest rates on loans rose above 7% a year ago. Thirty-one percent of repeat home buyers were able to pay cash for their home purchase. “This is likely due to the increase in housing equity,” NAR’s report notes.   Home sellers aim high—and it pays off. Sellers over the past year typically sold their property at 100% of their asking price—the highest recorded list-to-sale median since 2002, NAR notes. About 27% of sellers were even able to nab more than their list price. Home sellers also tended to sell their homes quickly, typically within three weeks. Due to high buyer demand and lack of housing inventory, 76% of home sellers didn’t offer a sales incentive; only 24% of sellers offered one (like covering the buyer’s closing costs or offering a home warranty policy), dropping from 33% the year prior. Multigenerational living gains traction. Multigenerational buyers climbed to an all-time high of 17% over the past year (up from 14% the previous year). Home buyers cited cost savings, elder care and accommodating young adults moving back home as reasons for purchasing a multigenerational home. “As home buyers encounter an unaffordable housing market, many are choosing to double up as families,” Lautz says. “Cost savings are a major factor, with young adults returning home—or never leaving—due to prohibitive rental and home prices. Meanwhile, elderly parents and relatives are moving in with family members as home buyers reprioritize what matters most to them.” FSBOs drop to an all-time low. For sale by owners comprised just 6% of home sales, a record low, according to NAR. Meanwhile, 90% of home sellers sold their home with the assistance of a real estate agent, citing benefits like being able to market their home to a wider pool of buyers and pricing the home more competitively. FSBOs typically sold their home for less—a median of $380,000 versus $435,000 for agent-assisted sold homes. “Most home buyers and sellers find it valuable to use an agent who is a REALTOR® to help them maneuver through the complicated home buying and selling processes, especially in a challenging housing market,” says NAR President Kevin Sears. Buyers dig deeper for higher down payments. In 2024, the median down payment among all buyers was 18%, the highest figure in more than 20 years. Broken out, first-time buyers made a median 9% down payment (their highest percentage since 1997), and repeat buyers’ down payments typically were 23% (their highest since 2003). Single women remain active in the housing market. Households with a single income and no kids—known as SINK buyers—have emerged as a homebuying force. Many SINKs are single females, who made up 20% of home sales over the past year while the share of single males fell to 8%. Meanwhile, the number of home buyers with children under the age of 18 is shrinking: 73% of recent home buyers did not have a child under the age of 18 in their home, the highest share on record, according to NAR’s data. Newly built homes gain greater buyer attention. New home purchases accounted for 15% of home sales over the past year, the highest share in about 17 years. New-home buyers say they were drawn to new construction because they wanted to avoid renovations or problems with systems, like plumbing or electricity, and they wanted to customize their home’s design features. Real estate agents remain a top information source. While buyers turned to the internet to help guide their home search, they rated real estate agents as the most useful information source. Eighty-six percent of buyers and 90% of sellers used a real estate agent in their transaction. The NAR consumer survey reveals the top qualities that sellers and buyers say they were looking for from an agent during the sales process. What Sellers Want Marketing the home to buyers: 22% Pricing the home competitively: 20% Selling the home within their specific timeframe: 18% Identifying ways to increase resale price: 15% Finding a buyer for the home: 13% What Buyers Want Point out unnoticed features/faults with a property: 55% Help to understand the process: 53% Negotiate better sales contract terms: 44% Provide a list of service providers (e.g. home inspector): 43% Improve knowledge of home search areas: 41%   Melissa Dittmann Tracey Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine and editor of the Styled, Staged & Sold blog. Content by Melissa Dittmann Tracey  https://www.nar.realtor/magazine/real-estate-news/9-buyer-seller-trends-driving-home-sales?distinct_id=hYtR6AyJa&user_email=gemma%40flhomeandloan.com

MORE

Is a Fixer Upper Right for You?

Looking to buy a home but feeling like almost everything is out of reach? Here’s the thing. There’s still a way to become a homeowner, even when affordability seems like a huge roadblock – and it might be with a fixer upper. Let’s dive into why buying a fixer upper could be your ticket to homeownership and how you can make it work. What Is a Fixer Upper? A fixer upper is a home that’s in livable condition but needs some work. The amount of work varies by home – some may need cosmetic updates like wallpaper removal and new flooring, while others might require more extensive repairs like replacing a roof or updating plumbing. Because they need some elbow grease, these homes typically have a lower price point, based on local market value. In fact, a survey from StorageCafe explains that fixer uppers generally cost about 29% less than move-in-ready homes. And that’s why, according to a recent survey, more buyers are considering homes that need a little extra work right now (see below): If you’re looking for an option to get your foot in the door, and you’re willing to roll up your sleeves and do a bit of work, a house with untapped potential may be a good option. Tips for Buying a Home That Needs Some Work Before you buy a home that may need a makeover, here are a few things to keep in mind: Choose a Good Location: You can repair a house, but you can’t change where it is. Make sure the home is in a neighborhood you like or one with increasing property values and a growing number of local amenities. This way, even after you spend money fixing it up, the house will be worth more later. Budget for Surprises: Fixing up a house can take more time and money than you might think. Make sure you save room in your budget for unexpected repairs or other unknowns that might come up while you’re working on the house. Get a Home Inspection: Before you buy, hire an inspector to check out the house. They’ll help you determine the necessary repairs, so you don’t end up with expensive surprises later. Plan Your Priorities: When deciding what to tackle first, it helps to categorize your goals. Think of your home in three ways: the must-haves (essential repairs), the nice-to-haves (upgrades that would make life easier), and the dream-state features (luxuries you can add later). This will help you prioritize and stick to your budget. Remember, the perfect home is the one you perfect after buying it. By starting with a fixer upper, you have the opportunity to customize a home to your liking while saving money on the initial purchase price. With careful planning, budgeting, and a little bit of vision, you can turn a house that needs some love into your perfect home.  Real estate agents are great at finding homes with potential. They know the local market and can guide you to homes where smart upgrades can add value. With their help, you’re more likely to find a house that fits your total budget and has room for worthwhile improvements. Bottom Line In today’s market, where the cost of homeownership can be intimidating, finding a move-in-ready home that fits your budget can feel like a real challenge. But if you’re open to putting in a little work, you can transform a fixer upper into your ideal home over time. A local real estate agent can help you explore what’s possible and find a place that’ll work for you.

MORE

What the Fed's Rate Cut Means for Mortgages

in First Time Home Buyers, Mortgage News What the Fed's Rate Cut Means for Mortgages When the Federal Reserve cuts rates, many assume that mortgage rates will follow suit. But if you’re in the market for a home, you might have noticed that mortgage rates have not immediately decreased, leaving you wondering why. The Fed’s rate cut decision does not directly control mortgage rates. Instead, it influences other economic conditions, which could impact the mortgage market. In this article, we’ll look at the relationship between the federal funds rate and mortgage rates and the potential outlook for both.     Why Did The Fed Cut The Base Rate? In September, the Federal Reserve noted that economic activity has continued to expand at a solid pace. “The U.S. economy is in a good place,” Fed Chair Jerome Powell said, “and our decision today is designed to keep it there.” Due to positive progress in the economy, the Fed cut the federal funds rate by .5%, or 50 basis points. The main factors that played a role in this decision where: Low unemployment: The unemployment rate is still below the national average, indicating a strong labor market. Inflation nearing target rate: Inflation is approaching the Fed’s goal of around 2% while maintaining economic stability. These improvements gave the Fed confidence to lower rates, making borrowing money cheaper and helping to stimulate further economic growth. How Does The Fed’s Rate Cut Impact Mortgage Rates? While the Federal Reserve’s decision to cut the benchmark interest rate can impact mortgage rates, the relationship is not always direct or immediate. The benchmark rate influences the overall borrowing environment, economic outlook and investor response, which can lead to changes in mortgage rates. Although mortgage rates did not immediately decrease following the Fed’s rate cut in September, they had already fallen by about half a percentage point in July and August in anticipation of the Fed’s action. The effect of a Fed rate cut varies depending on the type of mortgage: Fixed-rate mortgages are less directly affected by Fed rate cuts but may decline over time. Adjustable-rate mortgages (ARMs) are more directly affected, as they are often tied to short-term rates that closely follow the federal funds rate. A Fed rate cut can also have broader influence on the housing market, including: Increased Buyer Demand: Lower rates can boost homebuyer interest and lead to more competition and higher home prices. Increased Refinancing Opportunities: Current homeowners can refinance to lower rates. Increased Buying Power: Lower rates help borrowers to qualify for larger loans. When Is The Next Fed Rate Cut? According to most economists, the Fed is expected to cut rates two more times before the end of the year, with one meeting in November and another in December. These rate cuts are predicted to be around 0.25% to 0.5%. Jerome Powell has indicated that we could see more rounds of rate cuts continuing into 2025. However, while the Fed may keep lowering the base rate, mortgage rates won’t necessarily follow a straight downward trajectory. In fact, most economists predict that mortgage rates will remain volatile in the coming months, fluctuating up and down before ultimately trending lower over the next 6-18 months. Should You Wait For Lower Mortgage Rates? The idea of lower mortgage rates may be tempting, but waiting may not always be a great strategy. Lower rates can improve affordability, but while rates may decrease, home prices may rise, which could offset the savings. Rates can change quickly in a volatile market. If you find a good rate, it could be better to lock it in rather than waiting for further rate cuts. You may also find some peace of mind with a rate float down, which lets you benefit from a lower interest rate if rates drop while you’re locked in. Mortgage rates are influenced by a variety of factors, and timing the market can be tricky. Reach out to one of our licensed Mortgage Loan Originators to discuss your unique situation and get prepared to seize the opportunity that’s right for you.

MORE