Homebuyer Wages Grow 22%
While the average American saw his wages grow by just 4% in 2023, the average homebuyers wages grew 22% to $107,000 according to the National Association of Realtors (NAR) 2023 yearly Profile of Homebuyers and Sellers. While that percentage difference may seem stark, it actually makes sense. With both home prices and mortgage rates at record highs (see precious article), it seems mostly those who are high earners can afford a new home. Those offering higher bids and all-cash buyers while always having the edge, this truth holds even more in today’s market.
Other insights from the report found that one out of three (in 2022 it was 26%) were first time buyers and eighty nine percent used a real estate broker. According to the report, “While the share of first-time buyers is still near historic lows, it is higher than last year.” The typical buyer was 35 years old and repeat buyers averaged 58 years of age.
There were also shifts in the composition of buyers. A full 70% of 2023 buyers did not have a child under the age of 18 – the highest percentage of buyers without a child on record. In 1985, for example, only 42% of buyers did not have a child under 18.
Another significant change is that just 49% of buyers were married – the lowest since 2010. Nine percent were unmarried, single female buyers comprised 19%, and single male buyers represented 10%. These last two stats were increases over previous years.
Fourteen percent purchased multi-generational homes. The most important reason for this, according to respondents, was to care for aging parents. Other reasons were to save money and make room for adult children (who were moving back home) or relatives.
In terms of race: 81% were Caucasian, 7% were Hispanic, 7% were African American, 6% Pacific Islander, and 6% identified as “other.” Ten percent were born outside the U.S., up 6% from last year.
The median distance between the home they moved from and the home they moved to was 20 miles. In 2022, it was 50 miles. More people moved to the suburbs in 2023 than 2022 (47% vs 39%). Also, small towns and rural areas saw percentage increases in 2023 compared to 2022. This makes sense – in tougher economic times homes in these areas are less costly.
Eighty percent of buyers financed their home, up slightly from 2022 (78%). The average buyer’s downpayment was 8%, – the highest since 1997 when it was 9%. But the typical downpayment for repeat buyers was 19%, the highest since 2005. These stats make sense in that repeat buyers tend to be older, and therefore tend to have more assets.
Probably, due to high home prices and high mortgage rates more buyers dipped into their stock holdings and 401Ks or pensions than in recent years.
the typical home seller was 60 years old. This stat was unchanged from last year’s report. Sellers typically lived in their homes for 10 years before selling.
Sellers also used real estate brokers more often. “While the housing market had limited inventory and home prices were in flux, buyers and sellers both increased their use of real estate agents,” says Jessica Lautz, NAR deputy chief economist and vice president of research. “Buyers wanted an expert to help them find the right home and conduct negotiations. Sellers relied on real estate agents and brokers to price their home competitively and market it to potential buyers.”
Tracy Casper, NARs president, says, ““Having a realtor help you navigate the home buying and selling process provides peace of mind, especially in a challenging market with high prices, elevated mortgage rates and limited inventory,”