Today’s biggest question is what is going on in the real estate market today and, more importantly, where is it headed in the future? Using Information provided by Brian Buffini’s Real Estate Report we are able to see statistics, trends as well as demographics in the marketplace. There is an overriding consensus (78% in fact), of consumers surveyed, believe that over the next 12 months housing prices will hold steady or increase. Homeownership is largely still considered to be the best available investment to both current homeowners and renters. In fact, the national homeownership rate has increased by twenty percent since 1900- from 47% to 67%. American citizens, though, aren’t the only ones who see the United States housing market as a good investment. Forty-eight percent of foreign investors stated that they have invested in our housing market because it is a secure and profitable investment, while the other forty-three percent state that they invest due to location.
While existing home sales did fall by 3.8% in May 2011, median home prices have increased in May 2011 by 6.1% to $241,500 when compared to May 2010. Despite twenty-three percent of sellers selling their home within 7-14 days of having it listed on the market, there is a 9.3 month supply of existing homes for sale, nationally. Therefore, the median market time for a home is 8 weeks. Statistics do show that forty-four percent of home sellers offered incentives to buyers including home warranties and closing costs assistance. An important statistic to also look at is the comparison between asking prices and actual purchase prices. Thirty-one percent of buyers paid 100% or more of the asking price, fifty-one percent paid between 90% and 98% and seventeen percent of buyers paid less than 90% of the asking price. These statistics can be deceiving though when considering the amount of distressed properties in our national market. Particularly in regards to the thirty-one percent of buyers who paid 100% or more of the asking price, as this can be largely contributed to distressed properties being priced lower than their value in order to start a, “bidding war”. It is expected that thirty-five percent of all sales in the next two to three years will be distressed properties. In May 2011, thirty-one percent of all purchases were in risk of going to foreclosure. What this can mean for the buyers of these homes is that they should expect to spend about fourteen percent more money on improvements within the first year.
Is it a good time to buy though? Sixty-nine percent of consumers say yes, which can explain the twenty-eight percent of consumers who bought a home due to the affordability of homes. Whether you’re a buyer or a seller, though, here are some noteworthy buyer trends. Ninety percent of home buyers search for homes on the internet. The average buyer searched for a property for twelve weeks and saw twelve homes. Representing the largest category of buyers, thirty-six percent of buyers are between the ages of 25 and 34 and sixty-eight percent are married couples. Fifty-six percent of Americans prefer neighborhoods where retail stores, restaurants and businesses are within walking distance. Seventy-seven percent of home buyers purchased a detached single-family home. Eighty percent of buyers consider the quality of the neighborhood to be a larger factor than actual size of the home and seventy percent of buyers would be willing to pay $5,000 more for a home with “green” features.
It is important to look more specifically at first-time home buyers as well. Representing fifty percent of all buyers in 2010, they also agree that now is the time to buy. Sixty-seven percent of home buyers stated that the current market allowed them to purchase sooner than they initially expected, sixty-one percent were able to purchase a new home at a better price than expected, forty-three percent were able to obtain a lower interest rate than expected and fifty percent of first-time home buyers found a home in a better neighborhood than expected. While the average first-time buyer financed ninety-six percent of their new home, thirty-six percent still relied on help from family or friends to obtain down payment funds. Which areas and type of homes were most popular among these buyers? Well, Fifty-percent purchased in a suburb or subdivision, nineteen percent in an urban area or city, seventeen percent in a small town and ten percent in a rural area. The typical home that was purchased had a little over fifteen hundred square feet, three bedrooms and two bathrooms.
It is clear among consumers and more specifically buyers, that now is a good time to invest in the housing market as larger homes, in better neighborhoods, at lower prices can be obtained. While this may not be an ideal time for owners to try and sell their home, the statistics discussed above show that it may not be as bad as one may think. While many sellers are still and will continue to be in situations where they have to sell their homes, the market has slightly improved and as time goes on it will continue to reach a point of stabilization.
*Information obtained from: RIS Media, Inc.; Joint Center for Housing Studies of Harvard University; U.S. Census Bureau; The Wall Street Journal®; MSNBC®; The Christian Science Monitor®; National Association of REALTORS®; Urban Land Institute & NAHB®; Pew Research Center; The Gallup Poll™; The San Diego Union-Tribune, LLC.; Inman News™.