The 2008 NAR Profile of Home Buyers and Sellers:
Focus on Buyers

by Paul Bishop, Harika "Anna" Barlett and Danielle Hale, NAR Research

The National Association of REALTORS® surveys home buyers and sellers annually to gather detailed information about the home buying and selling process. These surveys provide information on demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also share information on the role that real estate professionals play in home sales transactions. NAR's Profile of Home Buyers and Sellers reports - based on results of those surveys - provide real estate professionals with insights into the needs and expectations of their clients.

The latest NAR Profile of Home Buyers and Sellers was released during NAR's annual conference and expo earlier this month. This article reports on some of the highlights from the 2008 Profile that focus on home buyers.

First-time Buyers and Repeat Buyers

Sixty-one percent of home buyers are married couples. Single women account for the next largest share of buyers - 20 percent. Ten percent of buyers are single men, 7 percent unmarried couples and 2 percent other. Sixteen percent of recent buyers are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.

The latest survey results show that first-time home buyers accounted for a larger market share of home purchases compared to the past five surveys. In fact, the percentage of first-time buyers in the time period surveyed (July 2007 to June 2008) was the highest since 2001. Additionally, in spite of the general slowdown in home buying activity, the share of first-time buyers has steadily increased since 2006. The share of first-time buyers rose to 41 percent from 39 percent of transactions in last year's survey and 36 percent in 2006.

The increasing share of first-time buyers is due to a variety of reasons, not the least of which is because they do not need to be concerned with selling a home they already own before purchasing another one. Given low home prices, plentiful supply and affordable interest rates, it's been an optimal time for entry-level buyers who plan to stay in their home for at least several years. Housing policy changes - such as the temporary first-time buyer tax credit and improvements to the FHA loan program - auger well for first-time buyers as well. NAR also expects stronger entry-level activity as the flow of credit improves.

The "typical" first-time home buyer was 30 years old - slightly younger than the typical age reported in 2007. The median income of first-time buyers was $60,600. And while married couple households account for 49 percent of all first-time buyers, single females represent a quarter of first-time purchasers. The typical first-time buyer purchased a home costing $165,000 and plans to stay in that home for 10 years, up from seven years in 2007.

The typical repeat buyer was 47 years old, earned $88,200, purchased a home costing $236,000 and plans to stay in that home for 10 years. Repeat buyers made a median down payment of 15 percent, but 10 percent paid cash for their property.

What They Bought

Detached single-family homes are the most popular choice for home buyers, whether they are first-time purchasers or repeat buyers. More than three-quarters of all home buyers bought a detached single-family home. First-time buyers more frequently purchased townhouses or condos than did repeat buyers. Ten percent of first-time buyers purchased a townhouse compared with 7 percent of repeat buyers; 11 percent of first-time purchasers bought a condo, vs. 8 percent of repeat buyers. These results probably reflect the relatively lower cost of those types of homes in most areas. Because first-time buyers typically have smaller median incomes than do repeat buyers they may not qualify for a loan on a detached single-family home with a higher purchase price.

The Home Search

Buyers used a variety of resources when they begin searching for a home. The survey results reveal that the Internet and real estate professionals are the most popular resources: 87 percent of buyers used the Internet while 85 percent used a real estate agent. Home searchers also relied on yard signs (62 percent), open houses (48 percent) and print or newspaper ads (47 percent). When it comes to where buyers first learned about the home they ultimately purchased, slightly more than one third of them cited their real estate agent as the source. Thirty-two percent cited the Internet. Indeed, buyers most commonly start their search process online and then contact a real estate agent.

The trend in using the Internet as an information source has risen consistently since NAR began asking buyers about their Internet usage. Even just five years ago, 71 percent of buyers reported using the Internet as an information source; in 2008 the percentage was 87. Not only has the trend in overall Internet usage risen, but the percent of buyers who reported using the Internet frequently increased from 42 percent in 2003 to 69 percent.

The Role of Real Estate Professionals

Consumers still rely heavily on the expertise of real estate agents to navigate the market. More than 80 percent of home buyers purchased their property through a real estate professional. This result should not be surprising, as a home purchase is the biggest transaction most households are ever involved in. One in ten buyers purchased their homes directly through a builder or builder's agent. Even though the Internet is a popular source of information in the home search process, 83 percent of home buyers who used the Internet to search for a home still relied on real estate professionals to manage the transaction.

Home buyers are consistent in their expectations of real estate agents. Buyers thought the most important agent services are helping find the right house, and negotiating sales terms and price. Because agents often are chosen based on a referral, or were used in a previous transaction, two-thirds of buyers contacted only one real estate agent in the search process. Nearly three out of ten buyers cited honesty and trustworthiness as the most important factor in choosing an agent. More than two out of ten said that the reputation of an agent was an important factor. One or the other of these two factors was considered most important for half of home buyers.

Satisfaction with real estate agents is very high among buyers. Nearly nine out of ten buyers would definitely or probably either use their agent again or recommend that agent to others. That is good news for real estate professionals. Much of their business relies on repeat clients: today's first-time home buyer is tomorrow's first-time home seller and repeat buyer.

*In August 2008, the National Association of REALTORS® mailed an eight-page questionnaire to 133,000 consumers who purchased a home between July 2007 and June 2008. The survey yielded 10,053 usable responses with a response rate, after adjusting for undeliverable addresses, of 7.9 percent. Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records. Information about sellers comes from those buyers who also sold a home. All information in the Profile is characteristic of the 12-month period ending June 2008, with the exception of income data, which are reported for 2007. Some comparisons are also given for results obtained in previous surveys. Not all results are directly comparable due to changes in questionnaire design and sample size. The median is the primary statistical measure used throughout this report. Due to rounding and omissions for space, percentage distributions may not add to 100 percent.

**The 2008 National Association of REALTORS® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500, or online at http://www.realtor.org/prodser.nsf/products/186-45-08?OpenDocument. The cost is $50 for NAR members and $125 for non-members.