WALTHAM, Mass. – February 13, 2017 – (RealEstateRama) — First-time homebuyers are finding it increasingly difficult to locate a home in Massachusetts as home prices and low inventory have significantly increased competition in the market according to the 2016 Massachusetts Profile of Home Buyers and Sellers. The study found that the share of first-time homebuyers dropped to a low of 35 percent, which is the lowest share of first-time buyers since the Profile began collecting Massachusetts data in 2003. However, the state is on par with the national level for the year, which is also 35 percent. The data is from the 2016 Massachusetts Profile of Home Buyers & Sellers, which is compiled annually by the National Association of Realtors® on behalf of the Massachusetts Association of Realtors® (MAR).
“While 2016 was an overall strong year for the Massachusetts housing market, rising prices and plummeting inventory have significantly impacted the ability of many first-time buyers to purchase a home in the Bay State,” said 2017 MAR President Paul Yorkis, president of Patriot Real Estate in Medway. “The only way we can solve this problem is to produce the type of workforce housing many first-time homebuyers want and need, can’t find.”
This is only the second time the percentage of first-time buyers has dipped below the 40 percent mark since NAR began recording the data. The state fared better than the South and West U.S. regions, but worse than the Northeast as a whole, which had a total share of 44 percent of first-timers in 2016.
Working with a Real Estate Professional:
Ninety-one percent of Bay State residents consulted a real estate broker when buying a home in 2017. Nationally, the number of buyers who have worked with a real estate professional was 88 percent. This is a slight decrease from the high in 2011-2012, when 89 percent of buyers used an agent. As the complexity of the home purchase process has increased, so has the use of buyer agents, which has grown from 69 percent in 2001. The percentage of buyers using an agent has been above the 80 percent mark since 2010.
When it comes to selling a home, sellers in Massachusetts worked with a real estate agent 87 percent of the time. Nationally, the rate was 89 percent for sellers. The survey also found that 18 percent of sellers in the Bay State had to delay the sale of their home because the value of their home was worth less than their mortgage. The national number was 11 percent.
The number of Massachusetts sellers who chose to sell their home without an agent or “For-Sale-By-Owner” (FSBO) was 10 percent and seven percent (down from eight percent) nationally. Of these, 46 percent of FSBO sellers nationally knew the buyer prior to the sale.
“It’s imperative in this competitive market that buyers and sellers recognize the importance of working with a Realtor®. No one has more knowledge of the home buying and sellers process, which is becoming more and more complicated every day,” said Yorkis.
The median household income of buyers was up to $97,700 compared to $88,500 national median income. Fifty-eight percent of homebuyers were married couples, 18 percent single females, nine percent single males, and 13 percent unmarried couples. Nationally, 66 percent of buyers were married, 17 percent were single females, seven percent were single males, and eight percent were unmarried couples.
The median age of the first-time homebuyer in Massachusetts was 33, compared to 32 nationally. Fifty-four percent of first-time homebuyers in the state were between 25 and 34 years old, while 24 percent were 35-44 years and 10 percent were 18-24 year years. First-time homebuyers in Massachusetts had a median income of $82,100 compared to $72,000 among first-time homebuyers nationally.
The median age of the home seller was 45 years and they had a median income of $115,000 (the US median was $100,700). The typical seller owned their home for 11 years. Eighteen percent of home sellers reported the main reason for deciding to sell was the home was too small. Another 18 percent cited the desire to move closer to friends and family, while 14 percent reported that the neighborhood had become less desirable. Three percent reported selling their house because they could not afford the mortgage and other expenses of owning a home.
In 2016, 87 percent of buyers in Massachusetts financed their home purchase (Ninety-seven percent of first-time buyers compared to 82 percent of repeat buyers). Savings continues to be the chief source of the down payment for 76 percent. Of those first-time homebuyers whose saving for a down payment or saving for a home purchase was delayed, 69 percent cited student loans compared to 55 percent nationally.
Forty-nine percent of buyers felt that the mortgage application process was either “much more difficult than expected” (17 percent) or “somewhat more difficult than expected” (32 percent). Forty-two percent of buyers felt the mortgage application process was “not difficult/no more difficult than expected” and nine percent felt it was “easier than expected.”
On the Sellers front, in 2016, 58 percent of home sellers did not reduce their asking price before the home was sold. Only 26 percent of sellers offered incentives to attract buyers compared to 36 percent nationally. Most often that assistance was applied to closing costs, home warranty policies and credit toward remodeling or repairs.
About the Massachusetts Association of Realtors®:
Organized in 1924, the Massachusetts Association of Realtors® is a professional trade organization with more than 24,000 members. The term Realtor® is registered as the exclusive designation of members of the National Association of Realtors® who subscribe to a strict code of ethics and enjoy continuing education programs.
by Eric Berman – eberman (at) marealtor (dot) com – 781-839-5507