The new American home buyer
The portrait of an average home buyer in America has rapidly changed as unemployment continues to remain high as do fears of job instability, and as the Home Buyer Tax Credit ended in 2010. Lending standards have tightened and Realtors say the number one problem they are having with transactions are their falling apart last minute and in 2010, one in three mortgage applicants were denied. In just one year, first time home buyers have dropped to a third of all buyers, down from half of all buyers, and older, more stable buyers now account for more of the market, according to the 2011 National Association of Realtors® (NAR) Profile of Home Buyers and Sellers which surveyed 5,708 home buyers and sellers this summer.
NAR reports that there was “a reversal of a ten year trend” of more single buyers in the market and many buyers are moving up or down because of non-optional life events like a job relocation, leading to a market where buyers aren’t buying out of a desire for change, rather a requirement for one which the NAR says “shifts the dynamics of the home buying market and the demographics of buyers.”
The new American home
Because of the changing demographics as mentioned above, the type of home that is being purchased has changed quite a bit in the last two years, according to NAR. Because more stable buyers are taking to the market, a higher share of buyers are repeat buyers which has caused an upward shift in the typical home size, as is typical with repeat buyers. New home sales continues to suffer compared to recent years past, despite a recent uptick in the market.
The biggest news from this report is that when buyers move in to their newly purchased homes, they expect to live there for 15 years, “substantially longer than seen in previous years,” NAR notes. As expected, first time buyers expect a shorter time in a home while older buyers anticipate spending longer in a house.
We will be looking into more detailed accounts of what changes are taking place, but it is first important to understand why the market has made such a dramatic shift.