Posted on Friday, December 17, 2010
The National Association of REALTORS® surveys home buyers and sellers annually to gather detailed information about the home buying and selling process. These surveys provide information on buyer and seller demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also share information on the role that real estate professionals play in home sales transactions. NAR’s Profile of Home Buyers and Sellers reports – based on results of those surveys – provide real estate professionals with insights into needs and expectations of their clients. The latest 2010 NAR Profile of Home Buyers and Sellers* was released in November.
Last month's Market Intelligence column highlighted some of the profile data on home buyers. In this edition, we focus on home sellers and how they may have “traded up” in purchasing another home.
(Note: sellers who responded to the survey were also home buyers; consequently, the information on home sellers can also be useful for real estate professionals who are looking at that portion of their clientele who are repeat buyers. For the first time since NAR Research began conducting the annual home buyer/seller survey, NAR Research asked sellers if this was their first selling experience. Nearly two-fifths of sellers were selling for the first-time. Slightly more than three-fifths were repeat sellers.)
Even for an experienced home seller, selling one's home can often be just as complicated and confusing as buying a home can be for a first-time seller. The recent economic recession presented challenges to many households, and this was certainly true for those households who wanted to sell a property in order to purchase and move into another home. As in the past, however, most home sellers turn to real estate professionals to help them sell their properties as well as to purchase another home in which to live.
Selected Demographics of Home Sellers
As has been the case for the last several years, married couple households account for three-quarters of home sellers. Single male or female households represented about one in five recent sellers, with single females accounting for more than 2.5 times as many sellers as single males. Reversing a trend from recent years, the proportion of single female sellers increased in 2010. Two-fifths of seller households have a least one child under 18; this is slightly more than the share of home buyer households with children (35 percent).
The median age of home sellers was older in 2010 than in 2009. The typical age of a seller who sold a home between mid-2009 and mid-2010 was 49 – compared to 46 the previous year
One reason we look at the age factor for home sellers is that a variety of other seller demographics may correlate to the age cohort. For instance, younger sellers tended to be buyers of larger homes. Those sellers aged 18-34 years old purchased a home 100 square feet larger (median) than the home they sold, and sellers aged 35-44 years old traded up to a home that was 200 square feet larger than the home they had recently sold. The contrary is also true: older sellers tended to purchase homes that were smaller, with those aged 55-64 years old trading down the most.
Younger sellers also tended to purchase homes that were more expensive than the residence that they sold. In fact, for the youngest home sellers – those aged 18 to 34 years old – the median purchase price of the home they bought was $98,300 more than the price they achieved for the home they sold.
Tenure and Equity Earned
The typical home seller has owned their home for eight years, up from seven years in 2009, and 6 years in 2008. Sellers of detached single-family homes, which account for the largest share of homes sold, owned their home for a median of nine years. sellers of condos in buildings with five or more units had the shortest tenure at the median—6 years. Age of the home owner also corresponds with tenure. Sellers under age 34 have typically lived in their home for 5 years before selling compared with a 12-year tenure for those sellers 55 to 64 years old.
Not surprisingly, the longer tenure in a home usually generates a higher equity earned from the home when sold. The median equity in dollar value in a home sold between mid-2009 and mid-2010, that is, the difference between the purchase price and the selling price -- was $33,000, which is 24 percent higher than when the seller purchased the home.. Sellers who owned a home for one year or less typically reported a greater gain when the home sold than did those whose tenure in their home was 2-3 or 4-5 years. One explanation for these large gains is that they result from the rehabilitation and resale of formerly distressed properties.
Why They Sold
Sellers have many reasons for moving, and these reasons also vary by age. Selling a home because it was too small was the motivation for 21 percent of recent sellers. In fact, wanting to trade up to a larger home was the most frequently cited reason among all sellers, but especially for younger sellers (46 percent). Job relocation was the second most cited reason for selling a home -- cited by 15 percent of survey respondents, but a decrease from the 21 percent of sellers who reported this reason in the previous profile. Job relocation was the most frequent reason for selling a home among those aged 45 to 54. Among those sellers 55 years old or older, moving closer to friends and family was the chief reason for selling a home, and it becomes an even more commonly cited reason among older groups.
The Role of Real Estate Professionals
By and large, most sellers – the majority of whom have worked before with a real estate professional – understand the value a real estate agent brings to the transaction. This is especially true in a still-stabilizing housing market. Nearly 9 out of 10 home sellers sold their home with the assistance of a real estate agent.
In comparison, in 2001, only 79 percent of home sellers sold their home using an agent or broker. By 2009 that percentage had increased to 85 percent, and in 2010 to 88 percent.by Jessica Lautz, Research Economist NAR