Knowledge is power. And if you’re planning on buying a home and purchasing what typically represents the single largest purchase the average person will ever make, you’ll want to arm yourself with as much information as possible. If you’re a homeowner planning on selling this year, it pays off know your competition, and what buyers are looking for.
These new soon-to-be homeowners are more likely to be millennials, not have children, and make more money than in previous years, according to the National Association of Realtors® 2020 Home Buyers and Sellers Generational Trends Report. With home prices reaching new highs, it’s not exactly a shocker that the average buyer tends to be a higher wage earner.
The report is based on a 125-question survey filled out by nearly 5,900 people from across the country who bought a home to live in between July 2018 and June 2019. Income data is from 2018.
Overall, today’s buyers are highly educated, with about 80% having at least an associate’s degree or additional schooling. That could explain why they’re doing so well financially—which is critical when buyers are dropping a median $257,000 nationally on properties, locally the median price paid for a home in Columbus OH was $197,000, a full $60,000 below the national average. That’s $7,000 more than last year. Buyers had median household incomes of $93,200 in 2018. That’s a 1.7% rise from the previous year.
The housing market has been really competitive the last few years, including right here in Columbus OH, a market which has consistently ranked in the top ten for more than two years. This has been most pronounced at the entry-level price points. Currently, the inventory of Central OH homes priced under $200,000 stands at just 1,056. Here’s how the this breaks down across our local Columbus suburbs: Dublin 12, Westerville 3, Worthington 4, Hilliard 2, Upper Arlington 2, Gahanna 2, Clintonville 7, Lewis Center 1, Delaware 10, New Albany 0, Powell 0. To successfully compete for a home, higher incomes help.
Today’s buyers are also likely to be coupled off, increasing household income and thus borrowing power. About 61% were married, while 9% were unmarried couples. Single women made up 17% of buyers, down just 1 percentage point from last year, while 9% were single men, unchanged from last year.
Home buyers were also overwhelmingly white, as Caucasians made up about 84% of those purchasing homes. Latino shoppers bought 7% of homes, Asians bought 5%, and African Americans bought 4%.
Buyers report their main motivation for buying a home was the desire to own their own residence. That was followed by wanting a larger property and to be closer to family and friends.
What we know about each generation of buyers and sellers
Millennials are still make up the bulk of today’s home buyers, representing about 38% of all purchases. The vast majority, 86%, were first-time home buyers.
This shouldn’t come as a surprise given where millennials are agewise. They’re hitting milestones like landing good paying jobs, promotions, moving out on their own, or moving in with a partner, or settling down and having kids.
One of their biggest roadblocks was student loan debt. Nearly half of younger millennials, age 22 to 29, had student debt and a median $26,000 balance. About 38% of older millennials, age 30 to 39, had a median $34,000 left to pay off.
Younger millennials purchased homes with a median price tag of $206,300—while their slightly older counterparts dropped a bit more, $282,000.
Members of Generation X were responsible for a quarter of all home purchases, at 23%. They’re also making the most money, with a median household income of $110,900 in 2018. And as they’re likely to have growing families, they bought the largest homes clocking in at about 2,000 square feet. The homes they purchased cost a median $278,000—just slightly under what the boomers paid.
Boomers bought 33% of homes. They were the most likely to splurge on costlier new construction. Younger boomers, aged 55 to 64, spent a median $250,500 on their homes, while older boomers, aged 65 to 73, spent a bit more at $255,900.
The types of homes buyers want these days
The vast majority of buyers opted for the classic American dream: a detached, single-family home. These abodes, which typically come with back and front yards, made up about 83% of sales.
Just 6% of folks opted for townhouses, 4% chose duplexes or condos in buildings with two to four units, and 1% purchased condos in large buildings with five or more units.
Half of folks headed to the suburbs, with 22% becoming homeowners in small towns. Just 13% bought homes in cities—the same percentage who chose to live in rural areas.
While the bulk of today’s purchases are outside of the cities in the surrounding suburbs and small towns, many of today’s buyers prefer walkable communities convenient to restaurants, entertainment, and shops however, homes in the suburbs are more affordable and offer better school districts. Buyers are purchasing more previously owned homes and prefer those that have been updated to feature modern floor plans, fixtures and finishes. These buyers are looking for a better price and better value, and looking to take advantage of today’s historically low interest rates and to purchase a home while they can still afford to do so after watching home prices continue to rise and experiencing rising rents.
Most folks chose smaller, three-bedroom, two-bathroom residences with a median 1,850 square feet. That’s a little less space than last year, when buyers purchased homes consisting of approximately 1,900 square feet.
Buyers overwhelmingly opted for cheaper, existing homes rather than newly built abodes. Just 13% of folks closed on new homes versus 87% of buyers who settled into a previously lived-in residence. The average home was built in 1990. And the truth of the matter here is builders have largely neglected the starter home tier of the market in years past, instead opting to focus on higher tiers of the market where home buyers tend to opt for additional upgrades that enhance the builders margins which have been compressed due to rising costs associated with land, permits, materials and labor.
Meet today’s home sellers
Today’s home sellers are likely to be either members of Generation X or older baby boomers likely moving into their forever home, or downsizing into their empty nest / retirement homes. And with a nationwide housing shortage worsening by the minute, they’re typically able to get 99% of their final asking price or more when listing and marketing the home through a top local real estate agent. However, about 4 in 10 of them did have to lower their list price at least once. So buyers can take heart!
Sellers also made a nice profit, netting a median $60,000 more than they originally paid for their properties. For those in Columbus, home prices were up 9.8% in January, year over year.
With the lack of supply, homes that are properly prepared for market and effectively marketed by a skilled real estate agent are being sold very fast. The downside here is if the property isn’t priced right and doesn’t sell quickly, the property becomes stale much sooner with buyers coming in much more aggressively. Additionally, the issue for sellers tends to be timing their transactions to avoid the need for temporary housing and a double move, carrying two mortgages or an expensive bridge loan, or having to rush to find a suitable replacement home which can lead to a seller settling for what’s on the market at the time their home goes into contract. The good news is that we at The Opland Group have a solution to help avoid all this, which also tends to lead to a higher sales price on your existing home, and thus more money in your pocket. Call us for details on this strategy!
About 70% of sellers were moving within the same state. Their most common reason for moving was to be closer to friends and family, needing a larger residence, or being transferred to a job somewhere else.
If you, or someone you know is considering Buying or Selling an Investment Property in Columbus, Ohio please give us a call and we’d be happy to assist you!
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley 43209 Columbus 43201 43206 43214 43215 Delaware 43015 Downtown Dublin 43016 43017 Gahanna 43219 43230 Grandview Heights 43212 Galena 43021 Hilliard 43026 Lewis Center 43035 New Albany 43054 Pickerington 43147 Polaris Powell 43065 Upper Arlington 43220 43221 Westerville 43081 43082 Worthington 43235