New NAR Survey of Home Buyers and Sellers Shows Growing Web Use in a Dynamic Housing Market
WASHINGTON (July 15, 2003) – Nearly three out of four home buyers now use the Internet as a tool when searching for a home, and those who use the Internet are more likely to use real estate professionals, according to a new survey by the National Association of Realtors®.
The 2003 National Association of Realtors® Profile of Home Buyers and Sellers, based on transactions during the first quarter of this year, is the latest is a series of surveys evaluating marketing, demographics and other characteristics of home buyers and sellers. It shows that 71 percent of home buyers used the Internet in their search for a home during the first quarter of 2003, up from 41 percent during 2001.
NAR President Cathy Whatley, owner of Buck & Buck Inc. in Jacksonville, Fl., said warnings that online information would reduce reliance on real estate professionals have proved to be false. “Almost every home placed on the market today can be found on the Internet, and more buyers than ever are using the Web to search for a home,” she said. “Nearly 90 percent of Internet searchers used a real estate professional, compared to 79 percent of non-Internet users.”
The typical Internet home buyer is married and 38 years old with a household income of $70,700. By comparison, the non-Internet buyer is married, 47 years old and has a household income of $56,300.
Although most buyers surf the Web, only 11 percent first learned about the home they bought on the Internet, up from 8 percent in 2001. Forty-one percent first learned about their home from a real estate agent, while yard signs accounted for 16 percent; several categories accounted for 7 percent each: newspapers, builders, and a friend, neighbor or relative. “What this tells is us that most people use a wide variety of sources in searching for a home, but the single most important resource is a real estate professional,” Whatley said.
The typical buyer walked through 10 homes, searched eight weeks to buy a home and moved 10 miles from their previous residence, while the typical seller placed a home on the market for five weeks and had lived in that home for six years. The median home size was 1,830 square feet, ranging from 2,000 square feet for a single-family house to 1,100 square feet for the typical condo in a larger multifamily building. The typical seller bought a home that was 18 percent larger, although 29 percent bought smaller homes.
David Lereah, NAR’s chief economist, said first time buyers remain a significant part of the market. “The survey shows 40 percent of all buyers purchased their first home,” he said. “Although this is down slightly from 42 percent in 2001, the strong demand from first time buyers provides a ready market for existing owners and allows sellers to move to another home. This dynamic in a low-interest rate environment is providing strong demand for all segments of the housing market and is contributing to record sales.”
The typical first-time buyer is 32 years old, has a household income of $54,800 and makes a down payment of 6 percent on a home costing $136,000. The typical repeat buyer is 46 years old with a household income of $74,600 and places a down payment of 23 percent on a home costing $189,000. Thirty-seven percent of first time buyers are single, compared to 28 percent of repeat buyers.
Single women accounted for the second largest segment of home buyers, accounting for 21 percent of transactions, after married couples, who bought 59 percent of homes. By contrast, single males were 11 percent of buyers, while unmarried couples accounted for 8 percent. Although the percentages of single males and females are higher than reported for 2001, seasonal buying patterns could be inflating the growth in this buying segment during the first quarter of this year. Even so, the survey reinforces previous findings regarding the significance of women buyers.
Use of Real Estate Agents
Three out of four buyers purchased a home through a real estate agent or broker – up from 69 percent in 2001; 14 percent bought from a builder and 9 percent directly from an owner. Of buyers who used an agent, 63 percent chose a buyer representative. Satisfaction with the agent was high for both buyers and sellers.
Buyers frequently choose agents on the basis of a referral by a friend, neighbor or relative; 44 percent of respondents did so. The most important factor in choosing an agent was reputation, according to 47 percent of buyers. Three out of four said they’d use the agent again or recommend theirs to others.
Seller responses were fairly comparable, with more than eight out of 10 selling through a real estate agent. Forty percent chose agents based on a referral by a friend, neighbor or relative, but 62 percent said reputation was the most important factor. Eighty-five percent said they were likely to use the same agent again or recommend to others.
A trend in recent years showing a decline in for-sale-by-owners (FSBO's) has stabilized, with 14 percent of sellers conducting transactions without the assistance of a real estate professional. This compares with 13 percent in 2001 and a cyclical high of 18 percent in 1997.
However, Whatley said this number doesn't tell the whole story. “Forty-four percent of buyers who purchased their home directly from an owner during the first quarter knew that seller in advance, compared with about 27 percent in 2001,” she said. “What this tells us is that a significant portion of FSBO transactions are not placed on the open market.”
“In fact, the slight increase in overall FSBO's results entirely from the rise in closely held transactions,” Whatley said. “If you just look at homes placed on the open market, only 5 percent of buyers in early 2003 purchased directly from sellers they didn't know in advance of the transaction – down from 11 percent in 2001.”
Because sellers are faced with a number of challenges, only half of recent FSBO's said they would sell their current home without the assistance of an agent, while many were unsure of what they’d do. The biggest problem areas for FSBO's were understanding and completing paperwork, preparing a home for sale, getting the right price and having enough time for all aspects of the sales process.
NAR mailed a six-page questionnaire in March to nearly 45,000 consumers nationwide who either bought or sold a home in early 2003, based on county records. The survey resulted in 3,023 usable responses; after factoring for address returns, the response rate was 7.3 percent. This survey differs from previous surveys in the series in that it measured transactions during the first quarter whereas previous surveys covered transactions on an annual basis. Some results, as noted, may reflect seasonal variances in market patterns