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REALTOR®: Survey Shows First-Time Home Buyers Set Record in Past Year

Wednesday, December 23, 2009

First-time home buyers reached the highest market share on record during the past year, according to the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers. The study reveals the number of first-time home buyers rose to 47 percent of all home sales from 41 percent of transactions in last year's study, the highest on record dating back to 1981.

Paul Bishop, NAR's vice president of research, said several factors aligned this year, providing a boon for first-time home buyers and much needed momentum jump start a recovery. "Tax incentives, record high affordability conditions and a pent-up demand brought a record share of first-time home buyers into the market," he said.

"First-time home buyers are important to economic recovery because they absorb inventory and free the market so existing owners can move up. Both actions serve to stimulate goods and services," said Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®.

The profile shows the median age of first-time buyers was 30 and the median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study, and plans to stay in that home for 10 years.
Fifty-five percent of entry level buyers reported they financed their purchase with an FHA loan, while another 8 percent used the VA loan program.

First-time buyers who made a down payment used a variety of sources: 61 percent used savings and 22 percent received a gift from a friend or relative, typically from their parents. Six percent received a loan from a relative or friend, 6 percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-six percent chose a fixed-rate mortgage.

Eighty-seven percent consider their home a good investment, and more than half see it as a better investment than stocks. Twelve percent of buyers own two homes, while another three percent own three or more homes.

The typical repeat buyer was 48 years old, earned $88,100, purchased a home costing $224,500 and plans to stay in that home for 12 years. The median down payment of all home buyers was 8 percent, and the number purchasing with no money down fell from 23 percent in 2008 to 15 percent in the current survey; 8 percent of buyers paid all cash for their home.

The median age of home sellers was 46 and their income was $91,100. Typical sellers had been in their home for seven years, up from six years in the 2008 survey, moved a median distance of 19 miles, and their home was on the market for 10 weeks. Nearly half traded up in size, 30 percent bought a comparable home and 22 percent traded down.

The typical home sold for 95 percent of the listing price, with a median increase over the seller's original purchase price of $36,000. Even with price declines in recent years, the typical home seller saw their equity increase 27 percent, according to NAR.

Buyers use a wide variety of resources in searching for a home: 90 percent use the Internet, 87 percent rely on real estate agents, 59 percent yard signs, 46 percent attend open houses and 40 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.

Sixty percent of buyers are married couples, 21 percent are single women, 10 percent single men, 8 percent unmarried couples and 1 percent other. Fifteen percent are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.

The biggest factors influencing neighborhood choice were quality of the neighborhood, cited by 64 percent of respondents; convenience to jobs, 50 percent; overall affordability of homes, 43 percent; and convenience to family and friends, 37 percent. Other factors with relatively high responses include quality of the school district, 26 percent; convenience to shopping, 26 percent; neighborhood design, 23 percent; and convenience to schools, 21 percent.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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