First-time buyers ‘modestly below normal’by Marcie Geffner
That’s according to the National Association of Realtors (NAR), which recently released its latest annual study of home buyers and sellers, including lots of details about these important first-time purchasers.
First-time-buyer numbers shrink
According to the NAR’s 2013 Profile of Home Buyers and Sellers, first-time buyers accounted for 38 percent of home purchases, a 1 percent dip compared with last year. The long-term average in this survey, which dates back to 1981, is 40 percent, NAR said.
In a statement, NAR Chief Economist Lawrence Yun said the share of first-time buyers appeared to be “modestly below normal,” in part because real estate investors have been more active in recent years. Investors are not well-represented in this study because the questionnaire was sent to the addresses of sold properties.
The typical first-time buyer
- Median age: 31, unchanged from 2012
- Median income: $67,400
- Purchase price: $170,000
- Square footage: The typical first-timer purchased a 1,670-square-foot home
Sixty percent of first-timers said their purchase was motivated by a desire to own their own home.
Savings, gifts used for down payments
The median down payment for first-timers was 5 percent. How did they come up with their down payment? According to the survey:
- 78 percent of these buyers tapped their savings to make their down payment
- 27 percent received a gift from a friend or relative, usually their parents
- 7 percent received a loan from a relative or friend
- 9 percent sold stocks or bonds
- 8 percent tapped into a 401(k) retirement account.
Among those who said saving for a down payment was difficult, more than half cited student loan expenses as a factor.
- 95 percent of entry-level buyers chose a fixed-rate mortgage
- 40 percent financed with a low-down-payment FHA loan
- 8 percent used a VA loan (no down payment required)
Eighty percent of all recent buyers said they thought their home was a good investment.
First-time buyers planned to keep their home 10 years.
What buyers want in a neighborhood and a home
The top factors that influenced buyers’ choice of neighborhood were:
- The neighborhood’s perceived quality
- Convenience to jobs
- Affordability of homes
- Convenience to family and friends.
Other factors included the school district’s perceived quality, neighborhood design and convenience to shopping, schools and entertainment or leisure activities.
Seventy-three percent of buyers said transportation costs were an important in their purchase decision. Eighty-five percent said heating and cooling costs were important, and 68 percent wanted energy-efficient appliances.
Eighty percent of buyers purchased a detached house. Seven percent bought a condo, another 7 percent chose a townhouse or row house and 6 percent bought some other type of housing. The typical home had three bedrooms and two bathrooms.