Marketing needs direction. If you are in the business of buying or selling homes, you need to know who you’re marketing to.
Of course, many real estate agents are working a niche, and local markets can vary widely. In general though, I’m a big advocate of what I call “selling to the fat part of the bell curve.” That means marketing and advertising to the broadest number of people who have an interest in buying or selling a home – and have the financial ability to do so. This involves gathering as much information as you can about your bread-and-butter prospects, including demographic, financial and behavioral data.
So, here is what we know about homebuyers in 2014. This valuable resource can help you better market your services to buyers in your area.
Key Findings From the Annual NAR Report
The National Association of Realtors® recently released their annual publication of real estate statistics, the 2014 Profile of Home Buyers and Sellers.
Key Facts From the Report About Buyers
- Forty percent of buyers choose their agent as a result of a referral from a friend or family member.
- Most buyers – two-thirds of them – only interview one agent.
- Buyers look at an average of 10 homes before buying.
- The new home search lasts for an average of 10 weeks – down from 12 weeks in 2012.
- First-time homebuyers are still down from historical levels. Thirty-three percent of recent homebuyers were first-time buyers. The historical norm is about 40 percent.
- The average age of first-time buyers: 31. The median household income of first-time buyers is $68,300.
- Average age of repeat buyers: 53. The median household income of repeat buyers is $95,000 per year.
- Sixty-five percent of recent homebuyers were married couples.
- More buyers are using agents: 89 percent of buyers used a real estate agent or broker. That’s up strongly from 69 percent in 2001.
- The simple desire to own a home was the number one motivator for purchases, with 24 percent reporting this as their leading reason to buy. It far outstrips those who bought because of a job change involving relocation (9 percent), and those who bought because their family situation changed (8 percent).
- Ninety-two percent of homebuyers used the internet during their home search. (How’s your website looking?)
- The average age of a home purchased in 2014: 21 years.
- The average size of a home purchased in 2014: 1,870 square feet.
- The average home sold in 2014 had three bedrooms and two bathrooms.
- The average number of years buyers expect to remain in their homes: 12.
- Single-family homes were by far the most popular, accounting for 79 percent of homes sold in 2014.
- Only 13 percent of buyers over age 50 bought a home in a senior-related development.
- Almost 9 in 10 buyers seriously considered heating and cooling costs when deciding whether to buy.
- Familiarize yourself with your area’s Walk Score: 7 of 10 buyers consider commuting costs when making their decision.
The Millennial Buyer Dilemma
- Millennials are lagging far behind when it comes to homeownership, compared to previous generations at their age, according to U.S. News & World Report.
- Nevertheless, the under-30 crowd would like to own someday – 74 percent expect to move in the next five years. During this time, millennials will form 8.3 million new households, reports the Demand Institute.
Key NAR Figures on Home Sellers
- Nine percent of sellers attempted to do a FSBO (For Sale By Owner) transaction.
- Homes sold directly by owners sold at significantly lower prices, on average, than homes sold via a real estate agent: $208,700 vs. $235,000.
- Agents, on average, delivered 13 percent more value to the seller than those selling on their own, all other things being equal.
Important Mortgage Data
For mortgage data, we turn to the December 2014 Origination Insight Report, published by leading mortgage industry software maker Ellie Mae.
- The average FICO score for loan applicants who actually received approval on mortgages was 728. This figure has not changed much since 2013.
- The average FICO score on mortgages that were denied was 679.
- Average loan-to-value ratio on approved loans was down slightly, to 80 percent. Debt-to-income ratios averaged a 34/38 front end/back end.
- On average, the debt-to-income ratio on denied applications was 29/46. This, of course, is very useful information to share with clients in the process of building up their credit before trying to buy a home.