One way to examine changes in the housing market is to look at the prior living arrangements of buyers, specifically changes in the last decade. In 2015, 43 percent of all buyers rented an apartment or house before buying. Forty-six percent owned their previous home and 10 percent lived with parents, relatives, or friends. In 2005, 46 percent also owned their previous home and in the decade between that share remained relatively constant.
In 2010, however, those who owned their previous residence dipped significantly to 35 percent. 2010 was also the year that first-time home buyers saw their highest buying percentage in the market at 50% of all homes purchased that year, according to NAR’s 2015 Home Buyer and Seller Profile, due to the government’s tax credit offered to spur first-time buyers in the housing market. By 2011, the percentage of repeat buyers jumped back up to 47 percent, which is above the historical norm.
Examining changes in patterns of previous living arrangement for first-time home buyers in the last decade is also revealing. Namely that the patterns for renters and those living with friends and family have not changed drastically, instead remained steady throughout the last decade. This is interesting to note because the demographics for first-time home buyers has changed over time—the age has increased, income fluctuated, and household composition has grown—and yet the shares of the market that previously rented or lived with family has remained constant. The other interesting feature of first-time buyers is that roughly one-fifth (19 percent) reported living with family or friends in 2015, likely to help save for the downpayment.
For repeat buyers, there were a few more changes over time worth noting. We see a big change from 2007 to 2008 where buyers that previously rented an apartment or house jumped up from 19 percent to 23 percent. The trend accelerated to a peak of 25 percent in 2010 when the first-time home buyer credit helped push fence sitters to purchase in the market. Thereafter, that share fell sharply to 21 percent in 2001, before rising steadily to 27 percent by 2015.
In the 2014 Profile of Home Buyers and Sellers, we saw that eight percent of sellers sold a distressed property largely in 2009 as a result of the housing crisis. We can infer from this trend that the increase in buyers that previously rented—and quite possibly that owned a home once before but sold under distress—are starting to return to the market in the last few years from 2012 to 2015. A portion of this group started as home owners, had to rent for a period of time until market and economic conditions improved, and each year have begun to purchase homes again.