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Seventy-Eight Percent of Recent Homebuyers Said Their Home Is A Good Investment

Dennis Norman, St Louis REALTOR -Seventy-eight percent of recent home buyers said their home is a good investment,according to the 2011 Survey of Home Buyers and Sellers conducted by the National Association of REALTORS.

Highlights of the survey:

  • 45 percent believe their home is a better investment than stocks.
  • The median age of first-time buyers was 31 and the median income was $62,400, up from $59,900 in the 2010 study.
  • The typical first-time buyer purchased a 1,570 square foot home costing $155,000; the estimated median monthly mortgage principal and interest payment was $794.
  • The typical repeat buyer was 53 years old and earned $96,600, notably higher than the $87,000 median reported in the 2010 profile.
  • Repeat buyers purchased a median 2,100 square foot home costing $219,500, with an estimated median payment of $1,006.
  • The median downpayment for all home buyers was 11 percent, ranging from 5 percent for first-time buyers to 15 percent for repeat buyers.
  • Although overall home prices have trended lower, other NAR survey data show the median price paid by owner-occupants is notably higher than paid by investors, who are under-represented in this study and largely use cash to purchase heavily discounted distressed homes.
  • First-time buyers who financed their purchase used a variety of resources for the downpayment: 79 percent tapped into savings, 26 percent received a gift from a friend or relative, typically from their parents, and 7 percent received a loan from a relative or friend. Nine percent sold stocks or bonds and 8 percent tapped into a 401(k) fund. Ninety-four percent of entry-level buyers chose a fixed-rate mortgage.
  • Fifty-four percent of first-time buyers financed with a low-downpayment FHA mortgage, and 6 percent used the VA loan program which requires no downpayment.
  • Sixty-four percent of all buyers are married couples, 18 percent are single women, 10 percent single men, 7 percent unmarried couples and 1 percent other. Last year 58 percent were married couples, 20 percent single women, 12 percent single men, 8 percent unmarried couples and 1 percent other.
  • Buyers searched a median of 12 weeks and visited 12 homes, both unchanged from 2010. Nine percent of recent buyers also own one or more investment properties, and 4 percent own at least one vacation home.
  • Seventy-seven percent of respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 6 percent some other kind of housing. The typical home had three bedrooms and two bathrooms.
  • Fifty-one percent of all homes purchased were in a suburb or subdivision, 18 percent were in an urban area, 18 percent in a small town, 11 percent in a rural area and 3 percent in a resort or recreation area. The median distance from the previous residence was 12 miles, the same as in the 2010 study.
  • More than half of buyers considered purchasing a foreclosure but didn’t buy one for a variety of reasons: 29 percent couldn’t find the right house; 15 percent each reported poor condition and a difficult process.
  • Eighty-nine percent of respondents used real estate agents and brokers; this was the most common method to purchase a home. Other methods include directly from a builder, 7 percent; and directly from the previous owner, 4 percent. Sixty percent of buyers working with real estate professionals were represented by a buyer’s agent.
  • As demonstrated in previous studies, buyers use a wide variety of resources in searching for a home: 88 percent use the Internet, 87 percent use real estate agents, 55 percent yard signs, 45 percent attend open houses and 30 percent review print or newspaper ads. While buyers also use other resources, they generally start their search process online and then contact an agent.
  • When buyers were asked where they first learned about the home they purchased, 40 percent said the Internet; 35 percent from a real estate agent; 11 percent a yard sign or open house; 6 percent from a friend, neighbor or relative; 5 percent home builders; 2 percent a print or newspaper ad; 2 percent directly from the seller; and less than 1 percent from a home book or magazine.
  • Ninety-one percent of home buyers who used the Internet to search for a home purchased through a real estate agent, as did 70 percent of non-Internet users, who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.