Anatomy of a Home Buyer

By Ryan Dosen

 

Meet Joe. Joe is your average home buyer. Joe looks a little different today than he did in recent years, but not a lot has changed. Joe is a little less likely to be first time homebuyer and he may even be looking to buy a multi-generational home to take care of parents or grown children. Joe has to deal with lower inventories in his home search, making him spend more money for a home and more time looking for a home. He is also dealing with tight lending requirements that will make buying even more difficult in the unlikely event that he is a first-timer.

We just learned a lot about Joe because the National Association of Realtors (“NAR”) recently released its 2015 Profile of Home Buyers and Sellers. There’s nothing too alarming about NAR’s findings, but it is interesting and potentially helpful to take a closer look at the anatomy of today’s home buyer.

Today’s Home Buyer

NAR reports that average home buyer Joe is 44 years old and most likely married (67 percent chance). He has a median household income of $86,100 and he is buying a home for around $220,000. Joe’s new home was built about 14 years ago, with approximately 1,900 square feet of livable space, three bedrooms, and two bathrooms. Joe’s new home is also just a median distance of 14 miles from his last residence.

Joe spent about 10 weeks searching for homes and wound up actually seeing about 10 homes before making a buying decision. He most likely began his search for a home online (87 percent start with Internet searches). However, if Joe had bypassed Internet searches and gone directly to his Realtor, he would have needed to see only about 5 homes in 5 weeks of home searching. There is a better than 4-in-5 chance that Joe decide to purchase a detached, single family home, and about a 1-in-7 chance that Joe is buying a multi-generational home to help care for aging parents or boomerang children that are moving back home.

It’s unlikely that Joe is a first time home buyer. The 32 percent chance that he is a first-timer is actually the lowest number the real estate market has seen since 1987 (30 percent). Many would point to today’s tightened lending requirements that are now making it difficult for borrowers, especially first time home buyers, to qualify for mortgages. Of course, if Joe’s married and has a second household income to help him qualify, he may have a better chance as a first time home buyer. That said, if Joe actually is a first-timer, he is more likely to be single and have a lower income. Sort of a chicken and egg thing. But that’s part of the reason why first time home buyers represent such a small segment of the home buying population.

Today’s Home Buyer

Joe isn’t real. But the numbers behind Joe are real. The Joes of the world have been impacted by tight lending requirements that have acted like a car’s governor, preventing the real estate market from accelerating to unsafe speeds in an environment of rock bottom interest rates. This is arguably not a terrible thing. It has, however, been a difficult and frustrating thing for many home buyers, especially first-timers.

But Joe is only half of the equation. Next week we meet Jane, our average seller that has waited a little longer than normal to sell her home.

 

– Ryan Dosen manages The Wayne Megill Real Estate Team of Keller Williams – Brandywine Valley in West Chester, PA. Contact Ryan Dosen to inquire about buyer or seller representation or to learn more about a career in real estate by emailing ryan@waynemegillteam.com or calling 610-399-0338.

This article was published by 21st Century Media and the Daily Local News (West Chester, PA). To read this article on the the newspaper’s site, please visit the Daily Local News.

Check out Ryan Dosen’s other 21st Century Media real estate columns.