Every year we take a look at the demographics of buyers and sellers from the previous year, and compare it to buyers and sellers from this year. Each year the demographics shift and change. In general, from 2012 to 2013, there were significant differences in how quickly a home sold, for what percentage of list price, and in the degree of buyer purchasing power. Here are the demographics of buyers and sellers in 2013.
TYPICAL CHARACTERISTICS OF BUYERS IN 2013
- 40% of buyers were first-time buyers, compared to a national level of 38%.
- The typical buyer was 36 years old. The typical first-time buyer was 30 and typical move-up buyer was 42.
- 66% of recent home buyers were married couples—the highest share since 2001.
- The market for single (unmarried) buyers remains suppressed. While tighened lending conditions continue, we expect single buyer purchasing power suppression to continue as well.
- The typical home buyer searched for 10 weeks and viewed 12 homes.
- The median income of 2013 buyers was $68,300. The median income for first-time buyers was $67,400, and $95,900 among repeat buyers. Historcially low interest rates in 2013 contributed to more buying power.
TYPICAL CHARACTERISTICS OF THE HOMES PURCHASED IN 2013:
- The typical home purchased in Minnesota in 2013 had 2000 square feet, 3BR, 2BA and was built in 1985.
- Like last year, New Home Sales made up only 11% of the home buyer market. In 2012 they made up 16%. We expect this number to climb in 2014 if the existing market inventory remains low.
- 77% of Minnesota buyers purchased a detached, single-family home.
- Two important factors influencing the homebuying decision were commuting costs and heating/cooling costs.
- 10% of Minnesota buyers purchased a multi-generational home due to children over the age of 18 moving back into the house, or because of the cost savings associated with the care of aging parents.
THE HOME SEARCH PROCESS - and FINANCING A HOME IN 2013:
- For 44% of Minnesota home buyers, the first step in the home search process was looking online.
- The typical buyer searched for 12 weeks and viewed 10 homes.
- 88% of buyers financed their home purchase.
- 96% of first time buyers financed their home, compared to 83% of repeat buyers. Buyers on average are financing 91% of their home purchase.
- More than half of all buyers reported making sacrifices in personal spending and luxury items in order to be able to afford their new home purchase.
- 24% of buyers reported the mortgage application process was somewhat more difficult than expected, and 16% reported it was much more difficult than they expected.
TYPCIAL CHARACTERISTICS OF SELLERS IN 2013
- The typical seller lived in their home for 9 years before selling. This tenure is up from 2007, when the typical seller lived in their home for only 6.
- Minnesota sellers sold their homes for 97% of list price, and 56% of sellers reduced their price at least once. In 2012 at least 60% of sellers report price reductions to get the home sold.
- 95% of Minnesota sellers were assisted by a real estate agent.
- 36% of sellers offered incentives to attract buyers, including paying for closing costs and home warranties.
- In Savage, Shakopee and Prior Lake in particular, the fastest-selling market in 2013 was the $300,000 - $350,000 bracket.
When comparing the 2013 Profile of Home Buyers and Sellers to the 2012 Profile, sellers are selling their homes in shorter time periods and for a higher percentage of list price (when a home is priced appropriately.) Married and/or dual head-of-household buyers are seeing experiencing far more buying power than single buyers. The buyer demographic is aging and downsizing, as we see more Boomers transition into retirement/maintenance-free living.