Those of us in the real estate industry constantly monitor interest rate activity and rate predictions from economists. In addition to rates, it’s important to consider the financing options and activities of today’s home buyers.
The National Association of Realtors’ 2015 Profile of Home Buyers and Sellers provide some insight into recent trends related to financing a home purchase. According to the profile, there was a shift in home buyer demographics over the last four years. While the median age of home buyers held steady at 44 years old, the median household income rose again from $84,500 to $86,100.
In looking at that income figure, it’s no surprise that the majority of home buyers seek financing in lieu of paying cash for the full purchase price. Yet I wondered how much of the purchase is being financed. Who is obtaining financing? Where are the funds coming from? Luckily, NAR’s profile provided these insights:
- Eighty-six percent of recent buyers financed their home purchase. Those who financed their home purchase typically financed 90 percent of the purchase price.
- First-time buyers who financed their home financed 94 percent of their home compared to repeat buyers at 86 percent.
- For 60 percent of buyers, the source of their downpayment came from their savings. Thirty-eight percent of buyers cited using the proceeds from the sale of a primary residence was the next most commonly reported way of financing a home purchase.
- Forty-six percent of buyers saved for their downpayment for six months or less.
- The most difficult step in the home buying process was saving for a downpayment, as cited by 13 percent of respondents.
- Of buyers who said saving for a downpayment was difficult, 51 percent of buyers reported that student loans made saving for a downpayment difficult. Forty-seven percent cited credit card debt, and 35 percent cited car loans as also making saving for a downpayment hard.
- Buyers continue to see purchasing a home as a good financial investment. Eighty percent reported they view a home purchase as a good investment.
Ready to take the leap into home ownership? Already a home owner but finding it’s time to downsize or upsize? Contact a Realtor today to start the conversation and explore your options.
The Greater Chattanooga Association of Realtors is “The Voice of Real Estate in Greater Chattanooga.” The Association is a regional organization with more than 1,500 members, and is one of more than 1,400 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. The Greater Chattanooga Association of Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade, and Walker counties in northwest Georgia. For more information, visit www.gcar.net.