The Shift in Homebuying
The housing market has become a pretty hot topic over the past few years. During a short period of time, from July 1, 2021, to June 30, 2022, the housing market has shifted from a low-interest rate with a low-inventory environment with bidding wars and frenzied activity to a higher interest rate but still a low inventory environment. Take a look at some of the most dramatic shifts that the National Realtor Association’s housing stats and analysis gathered from a 2022 Home Buyers and Sellers Profile. Click HERE if you would like to learn more about your home’s value and the amount of equity you may have. Knowledge is really important when considering one of your greatest financial investments, and I’m here to help. The support of a Realtor can help you optimize your investment on both sides of the deal! In fact, the report showed that 88% of buyers used a real estate agent and 86% used an agent to help sell their home.
1. First-time buyers dropped to an all-time low of 26% of all homebuyers.
Just one year ago first-time buyers consisted of 34% of all buyers. There is no question that housing affordability has shut out many first-time buyers with the rise in interest rates and home prices. Potential first-time buyers also face a rise in rental costs making it challenging to save for a down payment.
2. The age of first-time buyers is up to 36 years.
The age of first-time buyers jumped to 36 from 33-years-old. Twenty-six percent of first-time buyers reported "difficulty saving for a down payment" was a challenging task in the buying process and cited higher rental costs, car loans, credit card debt, and student debt as factors holding them back.
3. Small towns and rural areas saw a migration flow while there was a retraction of buying in urban areas and the suburbs.
The quality of the neighborhood, affordability, and proximity to friends and family was at the top of the list of reasons for choosing a neighborhood.
4. How far a buyer moved jumped to an all-time high of 50 miles from a range that had been steady between 10 to 15 miles.
Remote and hybrid work settings played a big role in this great migration. Zoom towns were the boom towns during the last year.
5. The share of all-cash repeat buyers jumped from 17% to 27% in the past year.
As the location to purchase in small towns and rural areas became more popular in the last year, this may have further allowed buyers to move from higher priced areas to more affordable ones.
6. Buyers are diversifying where they pull together the down payment for a home.
Given the rise in home prices, buyers are pulling together funds from multiple sources for their down payment. First-time buyers rely on savings as the primary source, but 22% (down from 28% last year) did use a gift or loan from friends/family, and 15% either sold stocks/bonds or took a loan from their 401k/retirement fund. While half of repeat buyers used proceeds from the sale of their past home, this does not work for all. Forty-one percent used savings, and 11% even sold stock or took a retirement loan.
For each of the six shifts noted above, leaves much to ponder for the coming year. Of course everyone has their own predictions. Here are a few of my questions: what will the age of first-time homebuyers be at the end of 2023; will people need to move back to more populated areas due to companies requiring them to be on-site; will we see an increase in buyers for larger, multi-family homes so that families can pool their resources? I look forward to hearing from one of our top South Carolina economists on December 13, 2022 as he shares his outlook for the 2023 housing market. Contact me for more information. I’d love to share what I have learned!
Remember, the right time to buy or sell a home is personal. My advice is to form a small team of trusted people to guide you through some short-term choices to help you meet your long-term goals.
Source-National Association of Realtors
