WRITTEN BY BOB HUNT
One of the most useful research projects of the National Association of REALTORS® (NAR) is the annual survey of homebuyers and sellers. It is particularly useful because it shows sellers and their agents what works and what sources buyers use to find their new homes.
This is the 36th year that NAR has conducted an annual survey of those who have purchased and sold homes. The most recent version (2017 Profile of Home Buyers and Sellers) became available in November of this year. The information is based on answers to a 131-question survey mailed to a random sample of 145,800 consumers who purchased a home between July 2016 and June 2017. (Names and addresses were provided by Experian, a company that maintains an extensive database of recent homebuyers that is derived from county records.) After accounting for undeliverable surveys, there was a 5.6 percent response rate.
In 2016, first-time homebuyers constituted 32 percent of the market. That was the lowest participation rate by first-time buyers since 1987 (30%). This year, 2017, the first-time buyer rate was 34%. Geographically, the highest percentage of first-time buyers was in the northeast (43%). Over the years the historic norms for the country have been in the 40% range. As more low-downpayment mortgage programs come into the market, there may be a good chance of returning to those norms.
The most useful information for sellers and their agents is to be found in the section on the home search process. While the survey results are not significantly different from those of recent years, the trends continue. For example, this year 86 percent of buyers said that they used the internet frequently during the search process. In 2003 that number was only 42%. This past year 55% of buyers said that they frequently used a mobile or tablet application. That is a newer and growing phenomenon. (Two years ago it was 41 %.) 68% of buyers said that they frequently relied on a real estate agent for information.
Forty-two percent of buyers went to the internet as the first step in the home search process. 17% contacted a real estate agent first, and 6% began by driving through neighborhoods looking for homes for sale. How can driving around be an option? Half the homes purchased were within 15 miles of the buyers’ previous residence. Interestingly, 8% of home buyers began the process by going to a bank or mortgage company.
Buyers use multiple sources of information in the process of looking for a home. Far and away the most used sources are on-line websites (95%) and real estate agents (89%). Mobile or tablet applications (74%) have replaced yard signs as the third most used source of information. Still though, 48% of buyers indicate that yard signs are one of their sources of information. Only 15% of buyers indicate that they used newspaper ads as an information source. A mere 2% said that they garnered information from television.
While there are a lot of intriguing data about the sources of information used by prospective homebuyers, certainly the most relevant has to do with where they actually found the home that they ultimately purchased. This year the information source that was highest in that category (49%) was the internet. Agents are second at 31%. Note that this is not to say that buyers bought their home through the internet. The typical scenario would be that a consumer sees the home on the internet, and then contacts his or her agent. 88% of those who used the internet to search purchased their home through an agent.
The differences in a little more than a decade are fascinating. In 2001, 48 percent of buyers learned about their home through a real estate agent, and only 8 percent found their home on the internet. The times they have changed.
Some things, though, remain persistently the same — or close to it. In 2001, a yard sign was the third most likely source of information leading to the home that was purchased (15%). And this year? It is still the third leading source at 7%, but this is now the fourth time in the survey history that it has been lower than double digits. Print media may not be dead, but it has shrunk to insignificance in this arena. In 2001, 7% of homebuyers found the home they ultimately purchased through a newspaper ad; in 2017, it was only 1%. It has been that way for five years now. Fewer than 1% found their home through a home book or magazine.
The 2017 Profile of Home Buyers and Sellers shows what works. It is a valuable resource.