Staying up on the Real Estate Market

5 circles white

no border black TM CMYK

Follow Up Program white border

white TM Edition CMYK

white border CMYK

5 circles black

I hope you enjoy the latest edition of Brian Buffini’s Real Estate Report. The goal of this piece is to help you stay educated on today’s market and position yourself as a true professional and your clients’ trusted advisor. We hope you’ll put this comprehensive report to use in your business. n

n

Learn where the market is headed and how it affects your clients Find out more about today’s buyers and how to nudge them off the fence

n

Give sellers a little perspective and get them to take action

n

Further communicate why you work by referral in this industry

It’s a good life!

Contents Industry Facts

Page 2

Mortgage Stats

Page 3

Buyer Facts, Trends & Demographics

Page 4

First-Time Home Buyer Facts

Page 5

Seller Stats, Trends & Demographics

Page 6

Distressed Properties

Page 7

© 2012 Buffini & Company

Brian Buffini’s Real Estate Report

Page 2

industry facts THE TYPICAL HOUSE PURCHASED: has

3 bedrooms & 2 baths

is

1,900 sq. feet

was on the market for

costs

$190,000

9 weeks

70% of Americans view owning a home as part of the American dream

74% of homeowners feel that owning a home is the best long-term investment

Sacrifices for homeownership:

Affordability is the top priority for consumers who are considering a home purchase in the next 12 months

2011 EXISTING HOME SALES BY REGION (COMPARED TO Q3 2010):

Northeast

West

up 16%

South

in 2012

in 2013

up 15.5%

4%

in 2014

Rent is projected to increase

Five states with the highest price appreciation:

3%

In 2012, existing home sales are projected to increase

25%

of buyers cut spending on entertainment

up 25.1%

Home prices are projected to increase:

2-3% 3%

up 11.6%

Midwest

4% - 5%

Alaska

2.1%

New York

West Virginia

3%

4.8%

South Dakota

3.1%

District of Columbia

24%

Nearly 1 out of 3 home sales in

34%

cut spending on luxury items or other nonessentials to purchase a home

20% 12%

cut spending on clothes

cancelled their vacation plans

The median home price to median family income has fallen to

December 2011 went to buyers who paid cash

2.6%—below the historical

Homes purchased by investors in December 2011

There is currently

Of the nation’s GDP, housing accounts for

ratio of 2.9%

8.5 months

22.8% 17%

of inventory

SOURCES: NAR Profile of Home buyers and sellers 2011, NAR, Orange Count y Register, Wall Street Journal, CNN Money, Bank of America: Mortgage Index Study, RISMedia

Brian Buffini’s Real Estate Report

Page 3

mortgage Stats GROUPS WHO FINANCED THEIR HOME PURCHASE:

18% of refinances

FIRST-TIME HOME BUYER MORTGAGE TYPES:

in 2011 were cash-out refinances, a drop from 88% at the peak in 2006

87% of buyers

82% of repeat buyers

95%

of first-time buyers

8% of borrowers were at

89% BUYERS WHO USED A CONVENTIONAL LOAN:

50%

of all buyers

64%

30%

least one month behind on their mortgage payments as of Q3 2011, down from 9.1% in the previous year

Average amount of purchase financed

37% of refinances

were cash-in refinances

of repeat buyers of first-time buyers CONSUMERS’ MOST IMPORTANT FACTOR WHEN CHOOSING A LOAN:

Average amount of downpayment:

5% first-time buyers 15% repeat buyers 35% of buyers put down

20% or more

Typical first-time buyer’s monthly mortgage principal and interest payment is

$794

Typical repeat buyer’s payment is

$1,006

39% 23%

lowest possible interest rate lowest possible monthly payment

76%

of consumers preferred a higher, fixed-rate mortgage to a lower, variable-rate one

72%

of borrowers plan to remain in their home for more than 7 years

900

800

700 600 500 The median credit score in the US has remained constant over the last decade at around 700

Sources: NAR Profile of Home buyers and sellers 2011, NAR, Buffini & Company Magazine, Wall Street Journal, RISMedia

Brian Buffini’s Real Estate Report

Page 4

Buyer Facts, Trends & Demographics

19% of home buyers own more than one home

HOME BUYERS BY HOUSEHOLD TYPE:

64%

single women

10%

single men

7%

unmarried couples

1%

other

67% Quality of neighborhood 49% Convenience to work 45% Overall affordability of homes 39% Convenience to family and friends

51%

of buyers said that finding the right property was the most difficult part of the buying process

32% Neighborhood design

West

11 miles

Midwest

South

15 miles

45% of recent

home buyers believe their home is a better investment than stocks

84% of buyers

purchased a previously owned home for a median price of

$180,000

16% purchased a new home for a median price of

$230,000

The average buyer searched for

12 weeks and visited12 homes

27% Quality of school district The typical repeat buyer purchased a

2,100 square foot home for

Sources: NAR Profile of Home buyers and sellers 2011, NAR

Northeast

10 miles

28% Convenience to shopping 21% Convenience to entertainment or leisure activities

HOME BUYERS WITH CHILDREN UNDER Age 18:

10 miles

married couples

18%

FACTORS INFLUENCING NEIGHBORHOOD CHOICE:

AVERAGE DISTANCE BETWEEN PREVIOUS HOME & NEW HOME PURCHASED:

$219,500

None

64%

One

16%

Two

14%

Three +

6%

Age of Home Purchased: Year built

%

2011

4%

2008 - 2010

13%

2005 - 2007

10%

2000 - 2004

11%

1985 - 1999

21%

1960 -1984

22%

1911 - 1959

16%

Before 1910

3%

Brian Buffini’s Real Estate Report

First-time home Buyer Facts

43%

34%

Northeast

Midwest

42% 34% South

79% used savings

9%

73%

detached single-family home

West

METHODS OF FINANCING:

TYPE OF HOME PURCHASED:

FIRST-TIME BUYERS BY REGION:

First-time buyers searched for

townhouse

6% other

3 weeks

Page 5

12%

26% received a gift from a friend or relative 9% sold stocks or bonds 8% used their 401(k)

condo

7% received a loan from a relative or friend

before they contacted an agent

37% of the market

in 2011 was comprised of first-time home buyers

76.6% of potential first-time homebuyers are millennials

A TYPICAL FIRST–TIME BUYER IS:

years old

54% married couples 21% single women 12% single men

bought a 1,570 square foot home for

31

FIRST-TIME HOME BUYERS BY HOUSEHOLD TYPE:

$155,000

12% unmarried couples TOP PURCHASE MOTIVATIONS FOR FIRST-TIME HOME BUYERS:

earns

plans to spend

60% desire to own home

in income

in their new home

11% affordability of home

$62,400

10 years

SOURCES: NAR Profile of Home Buyers and Sellers 2011, Move, Inc.

Brian Buffini’s Real Estate Report

Page 6

Seller STATS, Trends & Demographics

35% of homes were

on the market for less than 2 months before they sold

28% were on the market

8.6 The average number

Sellers’ Median Equity Gain:

$57,900

of home showings in 2011

12.1 The average

(a gain of 39%, purchased 11-15 years ago)

number of showings in 2010

for more than 6 months

Length sellers live in their homes:

39% of sellers did not reduce their asking price

26% reduced it once 14% reduced it twice it three 10% reduced times it 4 10% reduced or more times The average price cut was

8%

$26,000

(a gain of 16%, purchased 9 years ago)

18% 17% 16%

31%

traded up

13%

Sellers moved a median distance of

20 miles

n Reducing price

n Making repairs

bought a comparably sized home

n Paying origination fees or points for for 11-15 8-10 years years

53 The average children under 18 living at home

Most common incentives:

n Buying home warranty

46%

38% of sellers have one or more

offered incentives to prospective buyers

n Paying closing costs

Of Sellers:

age of a seller

41% of sellers

for 6-7 years

for 4-5 years

92% of sellers

said that their home was listed or advertised online

23% traded down

The average FSBO seller sold their home for

$150,000

Sources: NAR, NAR Profile of Home buyers and sellers 2011, CNN Money, RISMedia, JD Power and Associates

The average seller who used an agent sold their home for

$215,000

Brian Buffini’s Real Estate Report

Page 7

Distressed Properties

Over 50%

On average, foreclosed homes sell for a

34% discount

of buyers considered purchasing a foreclosure

Short sales sell for a

24% discount

29%

didn’t buy because they couldn’t find the right house

15%

didn’t buy because of the poor condition of the property

16 weeks

Average time it takes lenders to sign off on a short sale

In September 2011, default notices were

down 23%

15%

didn’t buy because of the “difficult process”

compared to October 2010

In September 2011, total foreclosure filings were

down 31% from September 2010

Foreclosure related sales in Q3 2011 accounted for In 2005 and 2006, foreclosure sales consistently accounted for

less than 5% of all sales nationwide

57% of all

residential sales in Nevada, the highest percentage of any state

20% of all residential sales in Q3 2011

were distressed homes, down from 22% in Q2 Sources: NAR Profile of Home buyers and sellers 2011, Reuters, RISMedia