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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
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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
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Give sellers a little perspective and get them to take action
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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