The Survey Says: Home Ownership is still a good Investment

by Tom Tousignant

in Blog, Home Buying, Mortgage Rates

Thinking of buying a new home in Charlotte?  A new survey reports that most home owners still think home ownership is still a good investment and most home owners made a profit on their long-term homes.  Key points:

  • 8,449 home buyers from July 2009 to July 2010 responded to this survey – that seems like a large enough number to be meaningful.
  • Long Term – sellers were in houses for 8 years, buyers expect to stay in house for 10 years
  • 24% increase – The mean gain for sellers who sold after 8 years was a 24% gain on the sale ($33,000)
  • First Time Home Buyers bought 50% of the homes purchased

New Orleans, November 05, 2010:

Home buyers today have affirmed a long-term view of home ownership, the typical seller is experiencing positive returns and the vast majority of home owners see their property as a good investment, according to the latest consumer survey of home buyers and sellers. The study was released here today at the 2010 REALTORS® Conference & Expo.

The 2010 National Association of REALTORS® Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, preferences, marketing and experiences of recent home buyers and sellers.

Although typical sellers had been in their previous home for eight years, up from seven years in the 2009 study, first-time buyers plan to stay for 10 years and repeat buyers plan to hold their property for 15 years.

… “This underscores two simple facts – home ownership encourages stability, and the longer you own, the better your investment.”

Even with several years of price declines, the typical seller who purchased a home eight years ago experienced a median equity gain of $33,000, a 24 percent increase, while sellers who were in their homes for 11 to 15 years saw a median gain of 40 percent.

“Sellers who purchased at the top of the market and had to sell in a short time frame were hurt by the price correction, but the vast majority who are able to stay for a normal period of home ownership generally built enough equity to make a trade-up purchase,”

… “Eighty-five percent of recent home buyers see their home as a good investment, and nearly half think that investment is better than stocks,” he said. “Even with the turmoil created by the housing boom and bust, this indicates the long-term view of home ownership as a fundamental goal and value remains sound. In fact, the single biggest reason most people buy a home is the simple desire to own a home of their own, cited by 31 percent of respondents, including 53 percent of first-time buyers.”

…The number of first-time home buyers rose to a record high 50 percent of all home sales from 47 percent in the 2009 study, building on success of the home buyer tax credit which began in 2009. The previous cyclical high for first-time buyers was 44 percent in 1991; records date back to 1981.

Fifty-six percent of entry level buyers financed their purchase with an FHA loan, while another 7 percent used the VA loan program.

Forty-four percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 96 percent of the listing price, compared with 95 percent in the 2009 profile.

Buyers use a wide variety of resources in searching for a home: 89 percent surf the Internet, 88 percent use real estate agents, 57 percent yard signs, 45 percent attend open houses and 36 percent look at print or newspaper ads. Although buyers also use other resources, they generally start the search process online and then contact an agent.

Not surprisingly, for-sale-by-owner transactions reached a record low, accounting for 9 percent of sales in the 2010 study, down from 11 percent in 2009. The share of homes sold without professional representation has trended down since reaching a cyclical peak of 18 percent in 1997. “In a market as challenging as today, it’s clear most home sellers need professional assistance,” Bishop said.

The 2010 National Association of REALTORS® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500, or online at www.realtor.org/prodser.nsf/Research.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

If you are thinking of buying  a home in Charlotte, NC, consider the following:

  • Interest rates are making house payments more affordable than ever
  • Home Prices are lower than in years past
  • If you are going to stay in one place for more than a few years, the pride of ownership and the equity buildup are worth the risk of ownership

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