The National Association of Realtors publishes the ‘
Home Buyer and Seller Generational Trends’ report, surveying home buyers and sellers across the United States. The 2017 report noted that “first-time buyers made up 35 percent of all home buyers.” The U.S Department of Housing and Urban Development defines a first-time homebuyer as an individual who: Has previously not had ownership in a property during the 3 year period prior to purchasing the property. For married couples, if either meets the criteria, they are considered first home buyers. Is a single parent or displaced homemaker that has only owned a home in marriage. Has only owned a property that is not permanently attached to a permanent foundation in accordance with applicable regulations. Has only owned a property that was not in compliance with state, local or model building codes and the opportunity cost of bringing the property up to standard is higher than the cost of purchasing a new home. What do first home buyers look like?
Homebuyer statistics drawn by the New York Times showed that 58% of first home buyers were married couples, followed by 18% being single females. First home buyers also appear to be purchasing their first homes as soon as they possibly can. 74% of first home buyers rented prior to purchasing their homes, followed by 21% who lived with their parents. A meager 12% borrowed less than 70% of the cost of their homes, and 17% relied on a loan to pay the full cost of their new property. The NAR report also noted that “Sixty-six percent of buyers 36 years and younger were first-time buyers, followed by buyers 37 to 51 years at 26 percent.” Why are first home buyers buying?
The NAR report outlined that the most common motivations for buyers differed between generations. For people under 61, “the main reason for purchasing was the desire to own a home of their own.” Some also viewed homeownership as a financial investment. On the other hand, people aged 62 and above primarily purchased to be close to friends and family. The desire to own a smaller home and retirement were also key reasons to purchase for that age group.
Best places for first home buyers in the United States
SmartAsset conducted a study of data for every U.S city with over 300,000 people. The study assessed cities on seven metrics; affordability ratio, market volatility, and mortgage lender data were some of the metrics used to make this assessment. Pittsburgh, Oklahoma City, and Omaha ranked as the top three cities for first home buyers in the United States. What tools are first-home buyers using to buy their homes?
The NAR ‘Home Buyer and Seller Generational Trends’ 2017 report provided insights on the channels used by Americans to purchase their homes. Given that 66% of first home buyers were 37 and younger and the demographic most likely to be first home purchasers, we can infer that most first home buyers find their first home through a real estate agent or broker, with 90% of people aged 37 and younger finding their home through this channel, either by visiting broker premises or looking at listings. This figure has not changed in 2018.
88% of first home buyers borrow more than 70% of the cost of their home. This is mostly done through a mortgage, supplemented with the lesser of $50,000 or 50% of their 401(k) plan balance. Additionally, first home buyers can qualify for a subsidy from first home buyer incentive programs if these are offered in their states.
Are first-home buyers paying full commission on the house?
Just as most buyers find their homes through real estate agents or brokers, sellers employ the same channel to sell their homes. Real estate agents can often charge
high commission fees to list a home, which in turn are passed on to the buyer. The fee paid to the buyer’s real estate agent is also most commonly paid by the seller, which again, can be passed on to the buyer.
In general, the industry average for buyer’s agents is between 2% and 3% of the listing price and can be dependent on local laws and seller discretion.
Introducing the flat-fee model
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