National Association of Realtors Buyer and Seller Survey Confirms Recent Trends

6/13/2002

From: Walter Molony of the NAR, 202-383-1177 e-mail: wmolony@realtors.org

WASHINGTON, June 13 -- Nearly two-thirds of home buyers with Internet access use the Web to shop for their next home, and buyers who use the Internet are more likely to use a real estate professional to handle their transaction than traditional home buyers, according to a new survey by the National Association of Realtors(r).

The survey also found a continuing decline in homes sold without the help of a real estate professional despite predictions that use of the Internet would increase the level of sellers marketing property on their own.

NAR's "2002 Profile of Home Buyers and Sellers," the latest in a biennial series of surveys evaluating marketing, demographic and other characteristics of home buyers and sellers, indicates that 62 percent(1) of buyers with Web access surf the Net to shop for a home. Forty-one percent of all home buyers use the Internet as a search tool, up from 37 percent in 1999.

NAR President Martin Edwards Jr. said that 77 percent of all Internet home shoppers buy a home through a real estate agent or broker, compared with 64 percent of traditional buyers. "While the Web is great in providing information, the survey tells us that consumers rely on real estate professionals to provide context to their research, and to provide services that guide them through the negotiation and transaction process," he said. He noted satisfaction with real estate agents was high with 67 percent of buyers saying they would definitely use the same agent in a future transaction. Edwards is a partner in Colliers Wilkinson & Snowden Inc., Memphis, Tenn.

Internet shoppers also spend less time looking for a home. The survey found that 63 percent said the Web saved time in the search process, and they tend to be somewhat younger with a median age of 36. The typical non-Internet home buyer is 40 years old.

Realtor.com, NAR's official Web site, was by far the most popular Web site visited by buyers, cited by 66 percent of Internet shoppers. Real estate company Web sites also were popular, visited by 41 percent of shoppers, followed by newspaper Web sites at 21 percent.

The study found that the number of homes sold directly by owners continued to decline. The percentage of for-sale-by-owners (FSBOs) was 13 percent in 2001, down from 16 percent in 1999 and a cyclical peak of 18 percent in 1997. Earlier surveys during hot real estate markets showed as many as 20 percent of owners would try to sell their home without a professional.

"Even with record home sales in each of our last two surveys, we find the reversal of the old trend is now clearly established," Edwards said. "Increasing complexity of the transaction process and the amount of time required are two major factors in the FSBO decline. A third factor is likely the issue of security in admitting unscreened strangers into your home."

Also, homes sold by a real estate agent captured a higher price. The median selling price of a home sold directly by an owner was $137,400, while the median selling price of a home sold by an agent was $175,000.

David Lereah, NAR's chief economist, said the amount of time it took to sell a home last year was half of what it was in most of the 1990s. "In 2001, the typical home was on the market for only four weeks. In 1999 it was five weeks, but throughout most of the 90s the typical selling time was eight weeks," he said. "The shorter selling time reflects the generally lean inventory of homes available for sale. In fact, it may be even shorter now given the increase in home sales so far this year."

The typical buyer searched for seven weeks to find a home, down from eight weeks in 1999, and visited ten homes before making a purchase, the same as in 1999. Buyers moved seven miles from their previous home where they had lived for six years. Eighty-seven percent purchased a detached single-family home.

For all buyers, the average length of time from contract to closing was five weeks, up from four weeks in 1999. "To some extent, the increase in time to close a transaction reflects a combination of record sales and a high level of documentation requirements," Edwards said.

Although buyers use a wide range of resources in looking for a home, 48 percent first learned about the home they bought from a real estate agent. The next biggest sources were yard signs, at 15 percent, and friend/neighbor/relative, 8 percent. Although 41 percent of buyers used the Internet as a search tool, only 8 percent first learned about the home they bought on the Web; newspaper ads were cited by 7 percent of buyers.

First-time home buyers remain a significant part of the market, accounting for 42 percent of sales in 2001, the same as in much of the 1990s. The typical first-time buyer was 31 years old, compared to 41 years old for repeat buyers. Entry-level buyer households earned a median income of $60,300 vs. $77,900 for repeat buyers.

The downpayment size varied considerably. First-time buyers typically make a downpayment of 6 percent on a home purchase, and 24 percent of downpayment funds were gifts from relatives of friends. By contrast, repeat buyers use the equity of their existing home and make a downpayment of 25 percent.

Married couples continue to dominate the market, accounting for 68 percent of transactions. Single women bought 15 percent of homes, while single men accounted for 7 percent; these are down from 18 percent and 9 percent respectively in 1999. "Single buyers were a smaller component of last year's housing market due to the mild recession," Lereah said. "Dual-income households felt more secure in making a major purchase, so married couples rose as a percentage of homebuyers."

The biggest factors influencing home purchases continue to deal mostly with location, including the neighborhood, price, work, schools, and families and friends.

The survey was compiled from an eight-page questionnaire mailed to 37,000 consumers who either bought or sold a home during 2001 based on courthouse deed records; 800 were returned due to address problems. The response rate was 15.7 percent, generating 5,700 usable responses.

The National Association of Realtors(r), "The Voice for Real Estate," is America's largest trade association, representing more than 800,000 members involved in all aspects of the residential and commercial real estate industries.

(1) Outside research shows that 66 percent of the U.S. population had Internet access in 2001. Extrapolating from the survey's finding that 41 percent of all home buyers used the Web as a search tool, 62 percent of people with Web access use the Net to shop for a home.

Information about NAR is available at http://realtor.org. This and other news releases are posted in the Web site's "News Media" section under NAR News Releases. Statistical data and surveys may be found at http://realtor.org/research.