Twice a year, we produce Brian Buffini’s Real Estate Report to give you a snapshot of today’s market and to help you educate your clients on the process of buying or selling a home. I recommend that you lean into this piece when giving a presentation—use it to help set expectations and position yourself as your clients’ trusted advisor. I hope you enjoy this comprehensive report and put it to use in your business. It’s a good life!
CONTENTS Industry Facts
PAGE 1
Mortgage Stats
PAGE 2
Distressed Properties
PAGE 3
Price Information
PAGE 3
Today’s Buyer
PAGE 4
First-Time Home Buyer Facts
PAGE 5
Seller Stats & Trends
PAGE 6
Consumer Confidence
PAGE 7
Today’s Real Estate Professional
PAGE 8
Why Working by Referral Works
PAGE 9
© 2013 Buffini & Company. All rights reserved.
Brian Buffini’s Real Estate Report
PAGE 1
INDUSTRY FACTS AVERAGE DAYS ON THE MARKET:
83
April 2012
46
April 2013
193.2
A median-income family would have almost twice as much of the income needed to purchase a median-priced home
80%
of home sales in May were to first-time buyers
Since 2012, home building is
5.1 months in May 2013 6.5 months in May 2012
South up 16.1% Northeast up 8.3%
Currently, there is less than five months of inventory on the market
West up 7%
In June, the number of improving housing markets increased by five to a total of 263. New additions to the list include: Topeka, KS
up 40%
Sioux City, IA Chicago, IL
14 million
new housing units will be needed this decade due to population growth
5.2%
increase in home values from April 2012 to April 2013, the highest level since June 2004
of homeowners say their home is worth the same or more than what they paid for it
In May, existing home sales reached their highest level since November 2009. From April to May, sales
grew 4.2%
SUPPLY OF LISTED INVENTORY:
Midwest up 16.3%
65%
The sales pace is where it was during the housing boom in 2005 and 2006 In 2012, housing affordability reached
EXISTING HOME SALES:
In Q1 2013, the homeownership rate was
62
March 2013
28%
44%
of agents said properties were sold in less than 4 weeks (up from 30% in April 2012)
Philadelphia, PA
Tallahassee, FL Salinas, CA Laredo, TX Baton Rouge, LA
June is the fifth consecutive month in which the Improving Markets Index (IMI) has designated more than 70% of U.S. metros as improving
SOURCES: CNBC, FANNIE MAE, HOUSINGWIRE, NATIONAL ASSOCIATION OF REALTORS®, RISMEDIA, THE NEW YORK TIMES COMPANY, THE WALL STREET JOURNAL, U.S. CENSUS BUREAU
Brian Buffini’s Real Estate Report
PAGE 2
MORTGAGE STATS In June, interest rates for 30-year fixed rate loans stood at
4.15%
1/3
TYPE OF LOANS BUYERS CHOSE:
of people refinancing 30-year mortgages chose shorterterm replacement loans
28%
49% Conventional loan 33% FHA loan 10% VA loan
of all refinancings in Q1 2013 involved shortening the amortization period
Of buyers, 92% chose a fixed-rate mortgage
32% Homeowners with a mortgage
Over the last decade, interest rates have averaged between
5% and 6%
68%
50%
of loans were given to applicants with credit scores above 740 In March, the average down payment was
19%
Homeowners without a mortgage
WHAT BUYERS SAID ABOUT THE MORTGAGE PROCESS:
44%
not difficult/no more difficult than expected
23%
somewhat more difficult than expected
17%
easier than expected
37% How owners decided how much to spend on a home:
70%
calculated it themselves
31% asked a lender
22% asked an agent
of households use more than 30% of their income for housing
18%
use more than 50% of their income for housing
87%
of owners have a fixed-rate mortgage SOURCES: ELLIE MAE®, FANNIE MAE, NATIONAL ASSOCIATION OF REALTORS®, REUTERS,THE WASHINGTON POST, U.S. CENSUS BUREAU
Brian Buffini’s Real Estate Report
DISTRESSED PROPERTIES
PRICE INFORMATION
AVERAGE TIME ON MARKET: Short sales
44 Days
OF ALL SALES, FORECLOSURES ACCOUNTED FOR:
25%
Compared with a year earlier, short sales
Non-distressed properties
73 Days
STATES WITH THE HIGHEST HOME APPRECIATION:
fell 35%
Foreclosed properties
in Q1 2013
43 Days
18%
of home sales in May were distressed
DISTRESSED PROPERTIES WERE PURCHASED BY: 37% investors
21%
Q1 2012
PAGE 3
17% first-time buyers 13% repeat buyers
Q1 2013
STATES WITH THE LARGEST PERCENTAGE OF FORECLOSURE SALES: In Q1 2013, foreclosure prices increased
Hawaii
Nevada
California
86%
of agents report constant or increasing prices in their markets
95%
of agents expect prices to increase over the next 12 months
51%
of consumers expect home prices to rise within the next year
Arizona
Oregon
In May, the median sales price for existing homes of all types was
$208,000 (up 15.4% from May 2012)
In Q2 2013, median home prices were up in 100 of 148 markets
MEDIAN SINGLE-FAMILY HOME PRICES: New Homes Existing Homes
28% Michigan 28%
2013
California 30%
(as of April)
Illinois 32% Arizona 28%
Georgia 35% SOURCES: BUSINESS INSIDER, INC., CNNMONEY, FANNIE MAE, NATIONAL ASSOCIATION OF HOME BUILDERS, NATIONAL ASSOCIATION OF REALTORS®, THE WALL STREET JOURNAL SOURCES: ?? Existing New
$216,700
2009
$216,700
$172,100
2010
$221,800
$173,100
2011
$227,200
$166,200
Brian Buffini’s Real Estate Report
PAGE 4
TODAY’S BUYER
89%
Until the 30-year fixed rate mortgage hits 10.5%,
buying will be cheaper than renting
POPULAR BUYER MISCONCEPTIONS:
of buyers used an agent or broker
considering today’s home prices and rental costs
90%
of buyers look for a home online first
24%
31%
73%
31%
of agents said their clients faced multiple offers
96%
of agents said that common challenges for buyers now are low inventory and multiple offers
1992
89% 37%
would give up an updated kitchen or walk-in closet
85% OF POTENTIAL BUYERS WOULD MAKE THESE COMPROMISES TO CLOSE ON A HOME: 50% would be flexible on the closing date 31% would buy the home ‘as-is’ 29% would pay more
SOURCES: CNNMONEY, HOUSINGWIRE, NATIONAL ASSOCIATION OF REALTORS®, TRULIA
26%
“Once I’m pre-approved, I have to close with that loan.”
24%
“My current bank will give the best rates so I shouldn’t shop around for a better rate.”
26%
11 MILES from previous residence
would give up a pool would give up a finished basement
26%
24%
MEDIAN HOME PURCHASED:
BUYERS’ FLEXIBLE WISH LISTS:
50+%
31%
“It isn’t possible to get a mortgage for less than 5% down.”
31% 24% 26%
Built in
1992
On average, a buyer searched for 12 weeks and viewed 10 homes
11 MILE
Brian Buffini’s Real Estate Report
PAGE 5
FIRST-TIME HOME BUYER FACTS More than 80 million millenials in the US will make up the next generation of first-time homeowners
65%
of first-time buyers would consider buying a foreclosure
TOP SOURCES OF DOWN PAYMENT:
40%
Savings
26%
In April 2013, first-time home buyers comprised 29% of all residential buyers
FIRST-TIME HOME BUYER PREFERENCES: 77% technological capabilities 69% an open layout in the kitchen and family rooms 30% a fixer upper over a house with minimal repairs needed HOME FEATURES THAT ARE IMPORTANT TO MILLENNIALS:
Gift from family or friend
First-time buyers are most likely to compromise on the size and price of a home but least likely to compromise on distance from and quality of schools
TO PURCHASE A HOME, FIRST-TIME BUYERS WOULD CUT SPENDING ON:
84% storage 76% space for TV 73% entry of the home 63% outdoor living space 36% ability to conduct
Luxury items Entertainment Clothes
business from home
SOURCES: BLOOMBERG, NATIONAL ASSOCIATION OF REALTORS®, PULTEGROUP, INC., RISMEDIA, U.S. NEWS & WORLD REPORT
401k or pension fund
of renters qualified to buy a median priced home in 2012 of working renters spend at least half of their income on housing
96%
of first-time buyers financed their purchase with a mortgage
Brian Buffini’s Real Estate Report
PAGE 6
SELLER STATS & TRENDS The average homeowner lives in their home for
9 years
Sellers moved to a new home a median of
19 miles away On average, sellers homes sold for
95%
ROI ON HIGH-END HOME-IMPROVEMENT PROJECTS:
of the listing price
29%
of sellers bought a similarly-sized home
Siding replacement
Window replacement
Major kitchen remodel
Roofing replacement
Master suite addition
79.3%
71.2%
59.7%
56.7%
52.1%
Garage-door replacement
Deck addition
Bathroom remodel
Garage addition
75.2%
59.7%
58.3%
54.7%
46% traded up
62%
of sellers purchased a newer home
25%
traded down
93%
ACCORDING TO THE PROFESSIONALS, THE BIGGEST PAYOFFS WHEN SELLING ARE:
of sellers had their home advertised online
SELLERS’ PRICE REDUCTIONS:
91%
did not reduce
listed it in the MLS
Brightening
18% 40% 25% 17% reduced it reduced it reduced it once
SOURCES: CNNMONEY, NATIONAL ASSOCIATION OF REALTORS®, THE WALL STREET JOURNAL
twice
three or more times
Cleaning/ decluttering
Fixing electrical & plumbing problems
Brian Buffini’s Real Estate Report
PAGE 7
CONSUMER CONFIDENCE WHY CONSUMERS THINK NOW IS A GOOD TIME TO SELL:
WHY THEY THINK NOW IS A GOOD TIME TO BUY: of renters feel that owning makes the most financial sense
the housing market
low home prices low home prices & interest rates
40%
of consumers believe now is a good time to sell a home, the highest percentage since June 2010 (up 16% from May 2012)
49%
of renters 18-34 are renting to make themselves financially ready to own
65%
of renters between the ages of 18 and 34 who make above $50,000/year intend to buy a home
low interest rates
71%
of homeowners say their housing experience is “very positive,” compared to only 34% of renters
people are looking to buy
POSITIVE IMPACTS CONSUMERS BELIEVE HOUSING STABILITY WILL HAVE ON THE COMMUNITY: n Safety n Economic well-being of neighborhoods & communities n Children’s ability to do well in school
n Individual & family financial security n Mental & physical health
6 to 12 months
The length of time the typical consumer thinks about buying or selling a home before becoming active in the market
SOURCES: FANNIE MAE, GALLUP, HOUSINGWIRE, MACARTHUR FOUNDATION, MARKET WATCH, PULTEGROUP, INC., RISMEDIA
76% 82% of consumers believe now is a good time to buy
of agents feel that now is a good time to sell
Brian Buffini’s Real Estate Report
PAGE 8
TODAY’S REAL ESTATE PROFESSIONAL
70% 70% 70% 12% 12% 12% 56% 56% 56%
of agents have a website have a real estate blog
AGENTS’ PREFERRED METHODS OF COMMUNICATION WITH CLIENTS:
REALTOR.com (85%) Company’s website (82%) Local MLS websites (67%)
use social media
74%
of agents feel the real estate profession will grow in the next five years TOP FEATURES ON AN AGENT’S WEBSITE: n
Property listings
n
Home buying and selling information
n
Mortgage or financial calculators
n
Link to their company’s website
n
TOP 5 WEBSITES WHERE AGENTS PLACE LISTINGS:
Community information
SOURCES: BUFFINI & COMPANY, HOUSINGWIRE, NATIONAL ASSOCIATION OF REALTORS®
92%
Personal website (51%)
Local REALTOR® association website (38%)
87%
90% Phone
74% Text
28%
The average agent had one transaction side involving a foreclosure and one involving a short sale
of agents are homeowners
26%
Instant message
WHAT TODAY’S SELLER WANTS HELP WITH: n
Selling within a specific timeframe
n
Marketing the home to potential buyers
n
Pricing the home competitively
n
Finding ways to fix it up to sell it for more
n
Negotiating and dealing with buyers
n
Preparing for settlement
In 2012, the median income of a sales agent was $250,000
$40,700
200,000
150,000
100,000
50,000
In 2012, Buffini & Company One2One Coaching™ Members EARNED AN AVERAGE GROSS COMMISSION OF
$224,454
Brian Buffini’s Real Estate Report
PAGE 9
WHY WORKING BY REFERRAL WORKS of agents generate more than 50% of their business from repeat clients
HOW MANY INQUIRIES AGENTS RECEIVE FROM WEBSITES:
34% 28%
of agents get more than 50% of their business from referrals from past clients
90%
of buyers and 84% of sellers would use their agent again or recommend him/her to others
13%
none
1-5
6-10
92%
9%
11-20
8%
21-50
4%
51-100
5%
100+
of consumers trust recommendations from friends and family above all other forms of advertising
—Brian Buffini
65%
The typical agent earned
of agents get no business from open houses
21%
of their business from repeat clients and
24%
21%
through referrals from past clients
“There is no lead more powerful than one referred from someone you know—someone who knows you, trusts you and will put their name to you.”
38%
of sellers found their agent through a referral from friends or family
40%
of buyers were referred to their agent by a friend, neighbor or relative
get less than 10% from open houses
SOURCES: BUFFINI & COMPANY, NATIONAL ASSOCIATION OF REALTORS®, THE NIELSEN COMPANY