If you took a time machine back to 1981, the housing and buyer preferences would look much different. Mortgage rates were four times higher than they are today. The typical home averaged 1,700 square feet and cost $70,000 ($201,376 in inflation-adjusted dollars), the Internet didn’t exist, and there was a much larger share of first-time buyers.
Here are 5 trends that have changed the landscape of the real estate industry in the last 35 years.
First-time buyer trends
The percentage of first time buyers in 1981 was 44% of the market. In 2015, due to various factors, the number of first time buyers dropped to 32% of market share, the lowest percentage since 1987 when first time buyers represented 30% of the market. However, recent data suggests that as much as half of the homes purchased in 2017 will be bought by first time buyers.
Recent national data indicates that first time buyers on average have a household income of $72,000 and pay $182,500 on average for their first home.
The Internet as resource
90% of buyers are online during their home search. Real estate related searches on Google.com grew 253% between 2008 and 2012. Nearly 8 in 10 new home buyers visited more than 3 real estate websites before taking action on a site.
Comparatively, open houses as a house hunting resource are used by only 50% of home buyers. Print advertising has been used less than 25% by home buyers in recent years.
A record 51% of home buyers recently reported finding the home they purchased online. 90% of the buyers who shopped for their home online used a real estate agent to complete their purchase.
Home size increases slightly
In 1981, home sizes on average were 1,700 square feet, compared to the 2015 average home size of 2,000 square feet, which has remained the same since 2011. The average home size among first time buyers is 1,650 square feet.
Down payments have reduced
In 1989, the average monthly mortgage rate was 10.62%. At that time, buyers typically financed their home purchase with a 10% down payment. More recently, buyers average a 6% down payment.
The home search takes longer
In spite of technology, the home search process is not faster. In 1987, the average home search was 7-8 weeks. Due to increasing regulations that impact lenders and appraisers, the average home search has increased to around 10 weeks in recent years.
Source: National Association of REALTORS®