National Association of REALTORS® 2021 Profile of Home Buyers and Sellers
January 4, 2022
As Americans struggled to return to a sense of normalcy in 2021, home buying and selling was anything but normal with historically low inventory and record sales gains. Outlined by the National Association of REALTORS® (NAR) in its 40th annual Profile of Home Buyers and Sellers, the pandemic fueled changes in buying and selling and led to higher asking and selling prices, fewer seller concessions and fewer days on market.
This year’s report – the first based on a full year of data occurring during the COVID-19 pandemic – revealed interesting motivators for buyers and sellers. The survey used a nationally representative sample of home buyers between June 2020 and July 2021 and found an increase in buyers who chose their new home based on its proximity to family and friends. Previously, convenience to work or affordability were higher ranking factors in choosing a new home. Sellers also cited moving to be closer to family and friends – along with a need for a larger home – as motivation for listing their home. 46 percent of sellers said they purchased a larger home.
The Ups & Downs
By the numbers, here’s a comparison of key 2021 survey results with last year’s numbers:
UP: First-time home buyers
The number of first-time home buyers increased to 34 percent in 2021 from 31 percent in 2020.
UP: Final sales prices
Homes sold for a median of 100 percent of the final listing price – the highest recorded since 2002.
UP: Sales Gains
The median sales gain for 2021 was $85,000 over the price the seller paid for their home. Last year’s median gain was $66,000.
DOWN: Home Tenure
2021 survey results found tenure in the home dropped from 10 years to eight years.
DOWN: Homes Financed
Fewer home buyers (87 percent) financed their purchase compared to 2020 (93 percent).
DOWN: Time on Market
Homes sold faster. In 2021 the median was one week on the market compared to three weeks in 2020.
DOWN: Incentives for Buyers
Sellers offered fewer incentives to attract buyers – only 26 percent in 2021 compared to 46 percent in 2020.
DOWN: Sales Price on For-Sale-by-Owner (FSBO) Transactions
FSBO homes sold at a median price of $260,000 compared to agent-assisted sales at $318,000 – a difference of $58,000.
In terms of demographics, the majority of home buyers surveyed were white (82 percent), heterosexual (89 percent), married couples (60 percent). For first-time buyers, the typical age was 33 and for repeat buyers 56. Single female buyers outnumbered single male buyers 19 percent to nine percent and unmarried couples represented nine percent of buyers. Hispanic/Latino buyers – at seven percent – slightly outnumbered Black/African-American buyers at six percent. The survey found 14 percent of recent home buyers were veterans and three percent were active-duty service members.
At 28 percent, a desire to own their own home was the number one reason cited for buying. Among first-time buyers, 65 percent claimed that as their primary reason. Buying a multi-generational home was the motivation for 11 percent of buyers who planned to take care of aging parents, have adult children move back home, or save money.
The survey found the typical seller was 56, with a median household income of $112,300, and had lived in their home for eight years. Almost all (90 percent) employed a real estate agent to sell their home and 92 percent said they were at least somewhat satisfied with the process. The two primary reasons for selling were moving closer to family and friends and a feeling that their neighborhood has become less desirable. 46 percent upgraded to a larger home while 28 percent purchased the same size home.
Sellers and agents connected primarily (68 percent) through referrals from a friend, neighbor or relative or an agent the seller had worked with before, and 82 percent contacted only one agent. The survey found that 53 percent of sellers used the same agent to both sell and buy a new home.
Buyers who purchased homes through a real estate agent represented 87 percent of those surveyed, and 47 percent chose someone recommended by a friend, neighbor or relative. Thirteen percent called upon an agent they had worked with previously.
A satisfactory relationship between clients and agents is important and the 2021 survey gave real estate agents high marks in their dealings with clients. A solid 89 percent of sellers and 90 percent of buyers surveyed said they would definitely or probably recommend their agent to others. In fact, the typical seller recommended their agent twice after their sale and 27 percent recommended their agent four or more times.
The Process and the Money
Internet searches were the first step in the buying process for 41 percent of buyers surveyed. Only 19 percent contacted a real estate agent first. Nearly all sellers chose to list their homes on the Multiple Listing Service. The typical search took eight weeks and buyers viewed a median of eight homes. Almost all buyers (95%) used online tools in their search – half used a desktop or laptop computer and half used a mobile device.
More than 60 percent of home buyers surveyed used savings for their down payment and 56 percent said they used proceeds from the sale of their home for their down payment. For first-time home buyers, the typical down payment was seven percent compared to 17 percent for repeat buyers. 29 percent of first-time buyers found saving for a down payment to be difficult and 28 percent received a gift or loan for their down payment.
Overall, buyers in 2021 continued to see a home purchase as a good financial investment. Low interest rates created a desirable market – especially for first-time buyers – but low inventory drove prices higher for both new and repeat buyers.