Economist's Commentary: March 7, 2008
African-American Home Buyers: Many Young, Female, and First-time Buyers
by Harika "Anna" Barlett, NAR Research
Among recent home buyers, African-Americans represented the largest minority with seven percent. Among first-time home buyers, 10 percent identified themselves as African-American. Based on the 2007 NAR Profile of Home Buyers and Sellers, the typical African-American home buyer was slightly younger than the typical buyer, with a median age of 38, compared to 39 overall.
The median income among African-Americans was $58,300, lower than the median income of typical recent home buyer, $74,000. Some of this income difference was due to differences in household composition. While 62 percent of all buyers were married couples and over half of home buyers had more than one income earners in their household, less than half of African-American buyers were married couples (46 percent), and most households had only one income earner. Additionally, nearly 60 percent of African-American buyers were first-time home buyers, compared to 39 percent of all home buyers.
In recent years, single female buyers have become a strong segment of the home buying population, with a 20 percent share. The percentage of single female home buyers was significantly higher among African-American buyers, with over one-third (34 percent), and much higher among African-American first-time home buyers, with 41 percent. In comparison, married couples constituted 40 percent of African-American first-time buyers.
When asked the primary reason for purchasing a home, nearly half of African-American buyers (46 percent) cited a "desire to own a home of my own/establish household", compared to one-third of all buyers.
Over two-thirds of African-American home buyers ranked the quality of the neighborhood as the most important factor influencing their neighborhood choice when searching for a home, and nearly half mentioned overall affordability of homes, which was ranked higher than convenience to job.
As the first step taken during home search, African-Americans had a higher tendency than buyers in general to gather more information about home buying process through the Internet, books, magazines, guides, seminars, or by talking to friends and relatives, and to contact a mortgage lender first. They used the Internet to a lesser extent than other buyers.
Since most of the recent African-American home buyers are first-time buyers and have limited experience about the home buying process, this brings an additional opportunity for REALTORS® to help them understand the process. In fact, the most frequently cited benefit provided by their real estate agent was that they "helped me understand the process." African-Americans were also more likely than other buyers to expect their agent help with price negotiations, help find and arrange financing, and help determine how much they can afford to spend on a home.
Over three quarters of African-American buyers reported they used a real estate agent when purchasing a home. Among African-American home sellers, the tendency to use a real estate agent was higher, at 88 percent (85 percent among all sellers). However, African-American home sellers reported to have used the assistance of their agents for specific tasks to a much lesser extent than other sellers. As an example, less than three-quarters of African-American sellers used the help of their agent to enter their property in Multiple Listing Service or to place listing or advertise on the Internet, compared to nine out of ten sellers in general. African-Americans reported more often than other home sellers that they expected their agent to help pricing their home competitively and help with paperwork, inspections, and preparing for settlement. While African-American sellers typically sold their homes at about the median home price, they can benefit more from the assistance of their real estate agents, particularly when listing their homes and advertising.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
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