More than half of home purchases in the Bay State last year were made by first-time homebuyers, according to a new study by the Massachusetts Association of Realtors (MAR). That’s up 5 percent from 2008.
"The study echoed what many members had been hearing from their clients, that the combination of more affordable prices, historically-low interest rates and the availability of the first-time homebuyer tax credit all worked together to get first-time homebuyers back into the market," said 2010 MAR President Kevin Sears, a broker/co-owner of Sears Real Estate in Springfield. "At the same time, because it was a buyer’s market in 2009, the study found that over 90 percent of home sellers chose to work with a real estate broker to help sell their home."
While the number of foreclosures fell in 2009 compared to 2008, the number of buyers who bought a foreclosed home went up. According to the study, 10 percent of buyers bought a foreclosed home, which is up 7 percent from 2008, but the same as the national average.
The median income of buyers was up to $94,800 compared to $88,100 in 2007 and higher than the $73,100 national median income. Fifty-nine percent of homebuyers were married couples, 15 percent single females, 14 percent single males, and 12 percent unmarried couples. Thirteen percent of homebuyers reported they were born outside of the U.S. compared to 9 percent nationally.
The median age of the first-time homebuyer was 30, which was down from 31 years of age in 2008. Sixty-one percent of first-time homebuyers were between 25 and 34 years old, while 18 percent were 35-44 years. Only 7 percent were 18-24 year years. First-time homebuyers had a median income of $84,600 compared to $61,600 among first-time homebuyers nationally.
Despite stricter lending requirements in 2009, 90 percent of buyers still financed their home purchase (94 percent of first-time buyers compared to 84 percent of repeat buyers). Savings was the chief source of the down payment for 76 percent of first-time buyers with 48 percent of repeat buyers using proceeds from the sale of their primary residence.
Fifty-four percent of all buyers believe their home purchase was a better financial investment than stocks (compared to 47 percent in 2008); with an additional 29 percent of buyers feeling their home purchase was at least as good an investment as stocks.
The study showed 92 percent of Massachusetts home sellers chose to work with a real estate professional, which is 7 percent higher than the 85 percent national average. Only 5 percent of sellers attempted to sell their home without the assistance of an agent or broker. This is much lower than the national share of 11 percent. Of those "For-Sale-By-Owner" (FSBO) sellers, about 20 percent knew the buyer prior to the sale.
The median age of the home seller was 44 years (which is down from 47 years in 2008) and they had a median income of $113,500. The typical seller owned their home for eight years. Fifty-percent of home sellers reported the main reason for deciding to sell was either a change in family situation or their home was too small. Only 6 percent reported selling their house because they could not afford the mortgage and other expenses of owning a home.
When it came to selling, 38 percent of home sellers did not reduce their asking price before the home was sold. Recent sellers typically sold their home for 94 percent of the listing price. Twenty-three percent of sellers did offer incentives to attract buyers compared to 42 percent nationally. Most often that assistance was applied to closing costs and home warranty policies.
The data is from the 2009 Massachusetts Profile of Home Buyers & Sellers, compiled by the National Association of Realtors (NAR), on behalf of MAR.
