The news is good for real estate agents. At the National Association of Realtors® (NAR) Real Estate Forecast Summit, held remotely earlier this month, Jessica Lautz, NAR’s deputy chief economist & VP of research, highlighted data showing that 88% of buyers use an agent to help them navigate the home transaction process.
Additionally, the use of agents by sellers is at an all-time high, as they seek to price their homes competitively, find qualified buyers and market their properties effectively.
“Buyers wanted that agent to help them find the right home and to negotiate for them,” she said. “For agents, it is very important in a changing market to make sure they’re finding and working with sellers to find the faults and features in a property not just to market it, but also suggest ways to fix up the home so it can be seen in the best light.”
Looking broadly about both short- and longer-term shifts in real estate practices, there are other changes that are impacting how business is done in the industry. Lautz also noted that the housing market in the past year has seen some significant shifts in buyer demographics and financing methods. One major trend is the continued prevalence of all-cash buyers, with 30% of repeat buyers purchasing their homes with cash. This is double the pre-pandemic level, indicating that housing equity gains have played a large role for first-time homebuyers.
Another notable change is the increasing role of inheritances and financial assets in enabling first-time homebuyers to enter the market. While gifts or loans from family and personal savings have declined, first-time buyers are finding more creative ways to finance their home purchases, including relying on inheritances and financial assets.
“What’s important to note is that among primary-residence buyers, we can see that the share of first-time buyers has essentially been cut in half from what it was before the pandemic or before the Great Recession,” said Lautz. “Historically, we’d have about 40% of the market be first-time buyers, but they’re being hit with lack of inventory, affordability and headwinds outside of the housing market such as student loan debt and high rent holding them back from saving for a down payment.
“It also reflects lower birth rates that have been happening in this country, and also perhaps childcare costs sneaking in as one of those barriers to first-time buyers because we’re actually seeing a drop in first-time buyers who have children under the age of 18.”
The typical first-time homebuyer is now older, with the median age reaching 40, compared to the historical range of 28-30. Lautz suggests that young adults are delaying their first home purchase, potentially missing out on equity gains over their lifetime.
“This means perhaps less moves,” she said. “The median age of today’s repeat buyer, 62, is also transformative because if we think historically of the typical repeat buyer in the market, they were as young as 36.”
The housing market has also seen an increase in single, unmarried and roommate buyers, as well as a decrease in the share of homebuyers with children under 18. This reflects the changing demographics and preferences of today’s buyers.
At 5%, For Sale By Owners (FSBOs) were at an all-time low this year, according to the report, with half being where the seller knew the buyer, so they were not open-market transactions.
