Only 39 percent of home purchasers last year in Massachusetts were first-time buyers, the lowest level in 12 years, according to a survey conducted by the National Association of Realtors (NAR). However, that level is above the national average of 33 percent, the report said.
Median income of both first-time and repeat buyers is significantly higher than the national average in the Bay State, according to the report, which was compiled by the National Association of NAR on behalf of the Massachusetts Association of Realtors (MAR).
"While the market in Massachusetts has been steadily improving, the lack of homes for sale, and the resulting upward pressure on prices has pushed a lot of first-time buyers to the sidelines," said the 2015 president of the Massachusetts Association of Realtors, Corinne Fitzgerald, broker-owner of Fitzgerald Real Estate in Greenfield, in a statement
She begged sellers to embrace this opportunity of low inventory, and "make the move they’ve been waiting for with the confidence that it is a good time to put their home on the market." The creation of additional workforce housing would also help, Fitzgerald added.
A general lack of homes for sale in 2014 and 2013 resulted in the lowest percent of first-time home buyers in Massachusetts since the study was first conducted by NAR on MAR’s behalf in 2003. The 39 percent level of first-time homebuyers is down from a median of 44.5 percent.
The median household income of buyers was up to $107,400 compared with $84,500 national median income. Sixty-three percent of homebuyers were married couples, 17 percent single women, 5 percent single men and 13 percent unmarried couples.
The median age of the first-time homebuyer was 31. Seventy percent of first-time homebuyers were between 25 and 34 years old, while 14 percent were 35 to 44 years old. Only 6 percent were 18 to 24 year old. First-time homebuyers in Massachusetts had a median income of $100,400 compared with $68,300 among first-time homebuyers nationally.
"Though the statistics show that first-time homebuyers in Massachusetts, on average, are financially better off than those across the country, some still find it a challenge to buy a home here." said Fitzgerald. "First-time buyers are critical to the health of the housing market. They are the fuel that ignites the housing market, moving up the ladder to keep the cycle going. We need to do all we can to attract first-time buyers."
The median age of the home seller was 52, and they had a median income of $116,800 (the U.S. median was $96,700). The typical seller owned their home for 10 years. Sixteen percent of home sellers reported the main reason for deciding to sell was their home was too small. Another 11 percent cited job relocation and 21 percent reported a change in family situation (e.g., marriage, birth of child, divorce). Only three percent reported selling their house because they could not afford the mortgage and other expenses of owning a home.
In 2014, 91 percent of buyers financed their home purchase (97 percent of first-time buyers compared to 87 percent of repeat buyers). Savings continues to be the chief source of the down payment for 70 percent. Of those first-time homebuyers who indicated saving for a down payment was the most difficult task in the buying process, 65 percent cited student loans compared to 57 percent nationally.
Forty-four percent of buyers felt that the mortgage application process was either "much more difficult than expected" (18 percent) or "somewhat more difficult than expected" (26 percent). Forty-two percent of buyers felt the mortgage application process was "not difficult/no more difficult than expected" and 15 percent felt it was "easier than expected."
In 2014, 51 percent of home sellers did not reduce their asking price before the home was sold. Only 14 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.
Ninety-one percent of Bay State buyers used a real estate broker in 2014. Nationally, the number of buyers who have worked with a real estate professional was 88 percent. 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.
When it comes to selling a home, Massachusetts’s sellers worked with a real estate agent 92 percent of the time. Nationally, the rate was 88 percent for sellers. The survey also found that 13 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 17 percent.
The number of Massachusetts sellers who chose to sell their home without an agent or "For-Sale-By-Owner" (FSBO) was seven percent, compared tonine percent nationally. Forty-three percent of FSBO sellers in Massachusetts knew the buyer prior to the sale. That number was 44 percent nationally.
