Young home buyers remain optimistic and see their home as a good investment, while older buyers are more likely to trade down to a smaller property to match changing lifestyles, according to the 2014 National Association of Realtors® Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent home buyers and sellers.
Eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for buyers age 33 and younger, to 74 percent for buyers 68 and older.
Some more highlights from the 2014 report, released earlier today:
- Gen Y comprises the largest share of home buyers at 31 percent, followed by Gen X at 30 percent, and both Younger (16 percent) and Older Boomers (14 percent) at 30 percent. The Silent Generation has the smallest share of home buyers at nine percent.
- Gen Y has the largest share of first-time buyers at 76 percent. The share of first-time buyers declines as age increases. Among the Silent Generation only two percent of buyers are first-time buyers.
- Among all generations of home buyers the first step in the home buying process is looking online for properties for sale. Gen Y is most likely among generations to also look online for information about the home buying process, while the Silent Generation is most likely to contact a real estate agent.
- More than half of Gen Y and Gen X buyers used a mobile device during their home search. Among those who did, 26 percent of Gen Y and 22 percent of Gen X found the home they ultimately purchased via a mobile device.
- Younger buyers were predominately referred to their agent through a friend, neighbor, or relative, while older buyers were more likely to use an agent again that they previously used to buy or sell a home.
- Overall 88 percent of recent buyers financed their home purchase. Nearly all (97 percent) of Gen Y buyers financed compared to just 55 percent of Silent Generation buyers.
- Among the generations, Gen X (29 percent) is the largest group who are recent home sellers followed by both Older Boomers (22 percent) and Younger Boomers (21 percent).
- Younger sellers are more likely to use the same real estate agent or broker for their home purchase than older sellers, as they are typically moving closer to their previous residence.
See more detailed generational breakdowns after the jump:
Foot traffic as measured by NAR Research’s Diffusion Index bounced back in February following two months of sharp decline. This improvement suggests that the year-over-year decline in existing home sales should stabilize in the months ahead, though at a level sharply lower than the spring of 2013. Slower demand will press up on inventories which are anemic, moderating price growth to a more sustainable pattern to the benefit of consumers.
Every month SentriLock, LLC. provides NAR Research with data on the number of properties shown by a REALTOR®. Lockboxes made by SentriLock, LLC. are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. For the month of February, the diffusion index for foot traffic rose 7.2 points to 26.2 after declining 32.3 points in the previous three months.
The index is well below the “50” mark which indicates that more than half of the roughly 200 markets in this panel had weaker foot traffic in February of 2014 than the same month a year earlier. This reading does not suggest how much of a decrease in traffic there was, just that the majority of markets experienced less foot traffic in February of 2014 than 12 months earlier.
This upward movement in foot traffic relative to last year is important for the spring market as it alleviates fears of a secular downward drift. Mortgage rates were more than a percentage point lower at this time last year and prices have risen to the detriment of affordability, but consumers’ purchase power remains strong by historical standards. The psychological impact of this change, bidding wars and few options took a toll. A more sustainable market with slower price growth and a moderation of credit overlays would benefit the spring market.
- According to data found in NAR’s annual Profile of Home Buyers and Sellers, home buyers and sellers consistently report they truly rely on referrals from friends and family to find an agent or they use an agent they had worked with before.
- Fifty-four percent of buyers and sixty-four percent of sellers found the agent they worked with either from a personal referral or they used an agent they had worked with before to buy and sell a home.
- Due to this fact, two-thirds of both buyers and sellers only contact one agent before choosing an agent to work with.
- Buyers are being assisted by professional real estate agents and brokers in what is often the most important transaction of their life. Their home purchase is not only the roof over their head or the garden they want to plant, but their nest egg for their future.
- The most important skills and qualities buyers look for are honesty and integrity. The most important factors to sellers are the agent’s reputation, and that the agent is honest and trustworthy.
- Annual data in the Member Profile validates what we hear from buyers and sellers on this point.
- Forty-two percent of member business is from referrals and repeat clients – this increases as the member’s experience in the field of real estate increases, reaching sixty-four percent for those with 16 or more years of experience.
- While many buyers find the home they purchase online, very few find the agent they end up working with online.
Approximately 27 percent of REALTOR® respondents reported that their last sale in December was by a first time home buyer  (28 percent in November). REALTORS® continued to report about the difficulty of home buyers in accessing credit and that first time buyers who generally use mortgage financing are finding it hard to compete against investors who typically pay cash. About 21 percent of respondents reported a sale to an investor. See the December REALTORS® Confidence Index Survey report for more information..
 First time buyers account for about 40 percent of all homebuyers based on data from NAR’s Profile of Home Buyers and Sellers.
For the third consecutive month, the diffusion index for foot traffic held roughly steady. This plateau follows a sharp mid-summer decline in the wake of a 1% increase in mortgage rates. Rates eased in October, but crept upward in late November, which could weigh on future trends.
Every month SentriLock, LLC. provides NAR Research with data on the number of properties shown by a REALTOR®. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. For the month of November, the diffusion index for foot traffic eased 2.5 points to 48.1.
Mortgage rates started the month low, but ticked upward in the later part of November on positive economic news and anticipation of a potential taper of asset purchases by the Federal Reserve. However, foot traffic held relatively steady for the 3rd consecutive month. Inventories remain tight in some markets like San Diego, which would constrain an increase in local foot traffic. But several markets across the Midwest have slowed relative to last year. Markets that continue to expand are doing so modestly.
The index eased just under the “50” mark in November which indicates that more than half of the markets in this panel had weaker foot traffic in November of 2013 than the same month a year earlier. This reading does not suggest how much of a decrease in traffic there was, just that the majority of markets experienced less foot traffic in November of 2013 compared to a year earlier.
The post-rate-spike recovery appears to have taken root. However, rates did ease in October and early November. Still, traffic remained strong despite the disruption of the government shutdown. Rates have since increased closer to 4.5% which could weigh on traffic in the coming months if the increases continue.