In the face of high interest rates and rising home prices, the typical buyer’s income rose 22% to $107K. 1 out of 3 (32%) was a first-time buyer, and 89% used an RE agent.
WASHINGTON – What does the typical buyer look like in 2023? The typical seller?
The National Association of Realtors® (NAR) released its 2023 Profile of Home Buyers and Sellers this week. The annual survey tracked transactions between July 2022 and June 2023. It was first published in 1981 to give industry professionals a detailed insight into current home buying and selling behavior.
Median household income for 2023 homebuyers skyrocketed year-to-year, rising to $107,000 from $88,000 only one year earlier.
“Given the erosion of housing affordability due to higher home prices and mortgage rates, the household income for those who successfully purchased homes jumped by nearly $20,000 and topped six figures for only the second time in our records,” says Jessica Lautz, NAR deputy chief economist and vice president of research. “In a still-competitive housing market, more well-off homebuyers were able to have their bids accepted by offering larger down payments and even by paying cash.”
First-time buyers made inroads in the 2023 study. Those new to the market made up about one in three sales (32%) – up from 2022’s one in four ( 26%). However, that percentage is still notably lower than the 38% annual average in earlier years, starting in 1981.
The typical ages for first-time (35 years) and repeat (58 years) buyers declined slightly from the record highs of 36 years and 59 years, respectively, last year.
“First-time buyers tiptoed back into the market this year with less competition and fewer multiple-offer scenarios,” says Lautz. “While the share of first-time buyers is still near historic lows, it is higher than last year.”
Household composition also continues to shift: 70% of recent buyers did not have a child under the age of 18 in their home, the highest share recorded. By comparison, in 1985, just 42% of households did not have a child under the age of 18.
Three out of five (49%) of recent buyer couples were married couples – the lowest share since 2010 – while 9% were unmarried. More buyers were also going it alone: Single-female buyers (19%) and single male buyers (10%) both increased.
Based on type of property, 14% purchased a multi-generational home. The top reasons for doing so were to take care of aging parents, save money and accommodate children or relatives over the age of 18 who were moving back home.
Racial diversity: In terms of homebuyers’ race:
- 81% were white/Caucasian
- 7% were Hispanic/Latino
- 7% were Black/African American
- 6% were Asian/Pacific Islander
- 6% identified as some other race
One in 10 (10%) of buyers were born outside the U.S., up from 8% last year, and 6% spoke a primary language other than English, up from 5% last year.
“Homebuyers in the past year were more diverse, both racially and ethnically, with increases noted among minority buyers, buyers who were born outside of the U.S. and buyers whose primary language is not English,” says Lautz. “This shows encouraging signs that the homeownership rate may narrow in the future as more minority buyers enter the market.”
Distance from home: The median distance between the home recent buyers purchased and the home from which they moved was 20 miles, a decline from 50 miles 2022 and closer to the previous norm of 15 miles.
Similarly, while suburbs boomeranged back (47% in the 2023 report, up from 39% in the 2022 report), they remain under the levels seen in 2017 to 2021 when they made up more than half of all buyers. At the same time, small towns and rural areas remain more popular than they were over the same period.
Home financing: 80% of buyers financed their home purchase, up slightly from 78% last year but down from 87% two years ago.
The typical down payment for first-time buyers was 8% – the highest since 1997 when it was 9%. The typical down payment for repeat buyers was 19%, the highest since 2005 when it was 21%.
In securing down payments, first-time buyers increased their reliance on financial assets this year, using the sale of stocks or bonds (11%), 401k or pensions (9%), IRAs (2%) and/or the sale of cryptocurrency (2%).
Realtor services: Nine out of 10 buyers (89%) relied on the services of a real estate agent or broker – an increase from 86% last year. Of those, 90% would use their agent again or recommend their agent to others.
On the selling side, 89% of home sellers worked with a real estate agent to sell their home – an increase from 86% the year before.
“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 Lautz. “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.”
The typical home seller was 60 years old – unchanged from last year’s report. Sellers typically lived in their homes for 10 years before selling.
“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,” says NAR President Tracy Kasper. “Buyers and sellers can rely on Realtors’ expertise to shepherd them through one of life’s biggest and most important purchases.”
© 2023 Florida Realtors®
