2013 Profile of Home Buyers and Sellers

Earlier this year a 122-question survey from NAR was mailed out to thousands of homebuyers and sellers across the U.S. The survey gives a profile of home buyers and sellers that covers everything from buying, selling, technology, financing, and how consumers interact with their real estate agents.

Here's  a short analysis of homebuyer characteristics for 2013...

First-time homebuyers still make up a lower-than-average share of total homebuyers, but their not too far behind; in 2013, they’ve made up 38 percent of buyers, down from the historical average of 40 percent.

One surprising faction that is multi-generational homebuyers, who made up 14 percent of all purchases; such purchases were made to account for college graduates living with their parents, aging parents living with their children and cost savings.

The median income for households was $83,300, while for first-time buyers and repeat buyers, it was $64,400 and $96,000, respectively.

Interestingly, despite those seemingly high income levels, 66 percent of recent homebuyers were married couples, the highest such share since 2001.

The typical homebuyer was 42 years old, while the typical first-time homebuyer was 31 and the typical repeat buyer 52.

Finally, the simple desire to own a home remains potent among American consumers – 30 percent of recent homebuyers said it was their primary reason for buying a home.

Big Predictions for Housing for Next 2 Years

Home sales are projected to post some big gains in the next two years, according to Fannie Mae’s latest monthly economic outlook. Fannie Mae economists predict that existing-home sales will rise by 10.5 percent this year, and by 6.2 percent in 2014. The economists made even bolder projections for new single-family home sales -- growing 15.1 percent this year and 44.1 percent in 2014.

"We expect home prices to firm further amid a durable housing recovery, continuing to boost household net worth, gradually diminishing the population of underwater borrowers, and reducing incentive for strategic defaults," according to Fannie Mae’s report.

Fannie Mae projects that mortgage rates will stay low by historical averages this year, but the 30-year fixed-rate mortgage will rise from an average of 3.5 percent during the first quarter to an average of 4 percent during the final three months of 2013. During the fourth quarter of 2014, mortgage rates are projected to tick up to a 4.5 percent average.

Mortgage applications for purchases are projected to increase by 16.8 percent this year and by 17.1 percent in 2014. However, a decline in applications for refinancings will likely cause mortgage originations to be down 14.5 percent this year and by 31.4 percent in 2014, Fannie economists predict.

Source: “Fannie Mae sees housing upturn as 'intact',” Inman News

S & P Outlook for U.S. Housing

The U.S. housing market continues to show signs of recovery, outpacing the relatively weak U.S. economic recovery. Standard & Poor’s baseline forecast assumes that the U.S. economy will continue to grow slowly in 2013, avoiding any substantial negative economic impact from the looming fiscal cliff and growing federal deficit. The U.S. economy grew 3.1% in the third quarter of 2012, up from 1.3% the previous quarter, and the unemployment rate declined to 7.7% in November from 8.7% a year ago. Both are moving in the right direction to support continued housing recovery in 2013. We believe that as long as the U.S. remains in recovery mode, U.S. housing fundamentals will continue to improve, bolstered by low interest rates and rising home prices. Taken together, we expect these trends to support improving consumer confidence and lead to a return to historical housing supply-and-demand fundamentals.

Our baseline forecast for housing assumes that U.S. national home prices (which rose 7% through the first nine months of 2012) will rise 5% in 2013, after a few months of seasonal weakness at the start of the year. Moderate economic growth, federal refinancing and loan modification programs, low mortgage rates, rising household formation, and limited new supply will contribute to price recovery, in our view. However, tight lending remains a key concern for housing demand because the limited availability of credit could weigh on borrowers.

Although the GSEs (government-sponsored entities, such as Fannie Mae and Freddie Mac) have been vital players in the U.S. mortgage finance market, 2012 was a strong year for mortgage banking, largely because of refinancing activity. This trend will likely continue in 2013, but banks may struggle to duplicate strong performance next year. Many non-bank finance companies have expanded their portfolios through servicing transfers at the cost of others exiting the business.


An improved outlook for housing, along with higher home prices, could increase the availability of mortgage credit and ease lending constraints, allowing borrowers with lower quality credit histories to refinance. More than 1.3 million borrowers have moved from negative to positive home equity in 2012, because of rising home prices. Homeowners with positive equity are able to refinance, taking advantage of the current very low interest rate environment. With more affordable mortgage payments, and some equity in their homes, consumers are less likely to default, which we view as positive for housing supply fundamentals. On the demand side, the rise in household formation over the past year is also positive for housing demand, in our view.

The impact of a recovery in housing fundamentals varies across the many housing related sectors and securities that we rate. While we expect all sectors to benefit from an improved housing forecast, the pace and depth of the improvement will depend on many factors, including each sector’s ability to participate in the recovery and their exposure to legacy portfolios and markets.

Banks’ Mortgage Earnings Will Moderate In 2013
Mortgage banking was a bright spot for banks in 2012, as refinancing volumes rose with the help of government programs and low borrowing rates. Banks may struggle to duplicate that strong performance in 2013 because the pool of borrowers eligible to refinance is shrinking, though rates are likely to remain low, and supportive government programs remain in place. Credit losses from residential mortgages continued to decline during the year, though the number of problem loans remains high and will continue to contribute to elevated losses in 2013 across the industry. Litigation risks for banks related to mortgage exposures grew in 2012 and are likely to continue to weigh on the industry in 2013 as state and federal regulators and investors seek to recoup losses from the past few years. Overall, the legacy residential mortgage exposure of banks should continue to weigh on results, but that drag on earnings and capital should continue to slow.

Homebuilders Benefit From Demand For New Homes
Buyers for newer homes returned to the single-family home market in 2012, resulting in better than expected operating results for most of the homebuilders we rate. Sales volumes and average selling price exceeded our initial expectations, and we currently expect that the homebuilders we rate will deliver on average 20% more homes in 2012 compared with 2011. Most new homebuilders have also posted healthy increases in average selling prices, outpacing overall market trends, as buyers gravitated toward competitively positioned new home communities and the supply of existing homes for sale has remained very low.

Despite our expectation that favorable housing demand and supply fundamentals will continue to support strong revenue and EBITDA growth in 2013, our outlook on the homebuilding sector remains stable. Improved fundamentals reduce downside risk in our view, particularly for the lowest rated companies, but we expect upside rating momentum will likely be more muted as homebuilders draw down their sizable cash balances (a primary support to liquidity over the past few years), and raise additional debt capital for future land and inventory investment in anticipation of higher sales volumes. The effect of this additional debt issuance will likely slow the leverage improvements necessary for more positive rating actions over the next 12 months.

We also remain concerned that the impact of a potential recession in the U.S. would be more significant for homebuilders than many other sectors, since a drop in consumer confidence would likely derail buyers’ appetite for large discretionary purchases such as single-family homes. In addition, decisions on numerous regulatory and policy initiatives that would have an impact on housing are slated for the first half of 2013, many of which could significantly affect the availability and cost of mortgage financing.

Click here, to read the full report.

Spring Home Buying Season Starts Early

Realtor.com®, a leader in online real estate operated by Move, Inc., recently released its February data on the U.S. housing market, offering valuable insight into the latest real estate trends. Realtor.com®’s February 2013 national housing data indicates that listing inventories increased 1.15 percent month-over-month; median age of inventory was at 98 days, a 9.26 percent decrease month-over-month; and median list prices were slightly higher month-over-month at $189,900. These numbers show that home buyers are getting an early start on the spring season despite the fact that inventories recently hit record lows.

“As we enter the busiest time of the year for home buyers and sellers, our latest housing trend data shows just how competitive the market is with a significant national housing recovery well underway,” said Steve Berkowitz, chief executive officer of Move, Inc. “Looking ahead, we can expect the amount of inventory to increase this spring along with higher list prices as sellers become more comfortable with the market conditions.”

The median age of inventory was down by 9.26 percent month over month and total listings are up 1.15 percent month over month, suggesting that many reluctant home sellers are starting to take an early advantage of the recent improvements in housing prices. Annual inventory decreases of -15.97 percent are consistent with a gradual, yet persistent downward trend that has been occurring over the last two years. From January 2013 to February 2013, the median age of inventory decreased in 145 of the 146 markets tracked by realtor.com®. The national median list price also reversed its downward trend, rising by 1.55 percent over the month of February and 1.01 percent on an annual basis. In addition, the number of markets experiencing a decline in home prices is shrinking, implying more good news for the housing market and U.S. economy at large.

There continue to be pronounced regional differences in the strength of the housing market. Several areas in California are experiencing the highest increases in list prices coupled with the largest inventory declines. Phoenix, Seattle and Denver are also among the top performers across the U.S. However, many smaller industrialized markets in the Midwest and the Northeast registered year-over-year price declines, as did Philadelphia, Chicago and New York City. While the number of markets experiencing year-over-year list price declines had been increasing, this pattern appears to be turning around as home list prices increased in 78 markets last month on a year-over-year basis and declined in 39.

National Data

• In February, the total number of single-family homes, condos, townhomes and co-ops for sale in the U.S. (1,494,218) increased by 1.15 percent month-over-month. On an annual basis, however, inventory was down by 15.97 percent.

• The national median list price for single-family homes, condos, townhomes and co-ops ($189,900) increased by 1.01 percent year-over-year and 1.55 percent month-over-month in February.

• The median age of inventory of for sale listings fell to 98 days in February, down 9.26 percent from January and 11.71 percent below the median age one year ago (February 2012).

Regional Data

• Nearly all of the markets with the largest year-over-year declines in their for sale inventories in February were in California, where declines averaged 48 percent. The list includes Sacramento, Stockton, Oakland, San Jose, Orange County, Los Angeles, Seattle, San Francisco, Riverside and Ventura. These markets also experienced a dramatic decline in the median age of inventory, falling to an average of just 31 days, or 53 percent lower than it was one year ago.

• On an annual basis, February median list prices were up by 5 percent or more in 51 markets while they were down by more than 5 percent in 11 markets. The number of markets experiencing a year-over-year list price decline in February (39) is significantly below the number of declines observed in January (50). California markets continue to dominate the list of areas experiencing the largest year-over-year increases in their median list prices, representing nine out of the top ten best performers.

• The ten markets with the longest time on the market continued to include the coastal areas of the Carolinas and the resort communities of Santa Fe, NM and Ashville, NC. In addition, five older industrialized areas also appear on the list: Reading, PA; Portland, ME; Albany, NY; Philadelphia and Trenton, NJ. California markets continued to dominate the list of top ten areas with the shortest time on the market, although the median age of inventory was also at record lows in Denver and Seattle. Median time on market in these areas averaged just 28 days, 51 percent lower compared to one year ago.

Realtor.com® regularly tracks real estate data and develops monthly reports featuring the number of listings, median age of inventory and median list price across the U.S. and in specific markets, as well as provides year-over-year and month-over-month changes. These reports are the only ones pulled directly from the realtor.com® database that updates every 15 minutes from more than 800 multiple listing services.