Are you receiving Inman’s Agent Edge? Make sure you’re subscribed here.
Check out all of Inman’s end-of-year coverage here.
“This year, while marking its 40th anniversary, the report is especially unique. It includes an entire year of data in which buyers and sellers purchased or sold during the COVID-19 pandemic,” it says near the beginning of the 2021 Profile of Home Buyers and Sellers by the National Association of Realtors (NAR). Indeed, this context is a critical distinction that explains so many of the unusual shifts evident throughout the report.
What’s most reassuring though, is what didn’t change: the essential role of real estate agents and brokers in both the buying and selling process. As in years past, the vast majority of both buyers and sellers were both satisfied with the services their agents provided and happy to recommend them to others.
So, if you’re in the throes of business-planning for the new year, here are a few key demographics, trends and takeaways you need to take into account.
Key demographic: Single female buyers and sellers
Across almost every aspect of the 2021 report, single female buyers and sellers are making the biggest moves. They are outpacing single male buyers more than 2 to 1 and have almost doubled their market share during the 40-year span of the report.
In addition, single females purchased their homes through real estate agents and brokers at a higher rate than any other type of buyer household at 89 percent.
Along with single males, single females were most likely to have purchased a townhouse or row house over any other household type. What’s more, they know what they want and are determined to get it: At 30 percent, single female buyers were the most likely to not make compromises when choosing their home.
Key trends to know
As always, the report was full of new insights, including the following:
1. Personal needs matter most
Perhaps because of the isolation and concerns generated by social distancing as well as the changes wrought by the increasing availability of work-from-home options, there was a jump in buyers who noted a top factor for their neighborhood choice was proximity to friends and family.
This was in contrast to previous years, where proximity to work and affordability were the most important factors.
The top reason for selling was also the desire to be closer to friends and family, along with a sense that their home was too small. This too indicates a common seller refrain caused by months of quarantine and multiple work-from-home household members.
2. Finding the right home is the biggest challenge
While listing information is more available than ever before, buyers still report that the most difficult part of the homebuying process was simply finding the right home to purchase.
This was exacerbated by the low inventory conditions in many markets, fueling short days on market and multiple-offer scenarios becoming commonplace.
3. Reduced tenure in the home
The biggest shift in this year’s report may have been the change in the length of time spent in the home — dropping to eight years from the previous tenure of 10 years.
NAR says this is the largest single-year change in home tenure in the history of the data set. This could be due to newfound work-from-home flexibility or to the irresistible allure of record-high home values for many sellers.
Top takeaways from The 2021 Profile of Home Buyers and Sellers
1. Luxury agents
The past year was a good one for many luxury agents as buyers looked for properties in resort and second-home communities that had more interior and exterior space.
Here are the numbers that matter most to luxury agents from this year’s report:
- 11 percent of buyers purchased a “multigenerational home” and cited taking care of aging parents, welcoming adult children back home, and cost savings as their most compelling reasons.
- 46 percent of sellers were trading up to a larger home and 28 percent were purchasing a home of the same size, for a combined total of 74 percent of sellers.
- Among the reasons that repeat homebuyers bought were a desire for a larger home (14 percent) and a desire for a home in a better area (10 percent).
- Luxury agents in the South rejoice: The median home purchased there was 1,980 square feet larger than in any other region.
Takeaway
- Larger luxury homes aren’t just for high-net-worth buyers. Often they are a result of the combined buying power of multigenerational households. That makes luxury homes with private dwelling spaces and separate entries particularly attractive for many in this niche.
- Forget downsizing. If the pandemic has taught us anything it is that there is never enough room in our homes. This may be especially true for luxury buyers who often tend to skew older and may be sharing their home with aging parents, adult children or frequently visiting grandchildren.
2. New construction
While new construction was seen by many as a way out of COVID-related inventory shortages, supply chain and labor challenges kept it from fully taking advantage of the opportunities offered by the 2021 market. While in 1989, 29 percent of buyers purchased a new home, only 15 percent did so in 2021.
Most of the buyers who purchased new homes did so to avoid renovations and problems with plumbing and electricity (36 percent), according to NAR. By contrast, those who specifically chose to purchase a previously owned home (38 percent) felt that it represented a better overall value.
Takeaways
- Agents specializing in new home construction will need to center their messaging on timing and availability in their market, especially in light of the reporting around shortages and delays.
- In addition, to make their message more attractive, they’ll need to emphasize the long-term savings and return on investment represented by new home construction, despite a higher initial investment.
3. Seniors real estate specialists
For agents and brokers who specialize in the senior market, there were a number of interesting statistics to consider. One is that the age of a repeat buyer jumped from 36 in 1981, the first year NAR gathered these statistics, to an all-time high of 56 this year.
This is indicative of both the later start of first-time homebuyers (29 in 1981 to 33 in 2021) and the longer hold time for homeowners, especially in the years following the Great Recession.
Since 2010’s report, senior-related housing has increased slightly from 11 percent to 14 percent of buyers over the age of 50.
- Many of these (68 percent) purchased a detached, single-family home.
- Fifty percent bought in a suburb or subdivision, down slightly from 52 percent in 2020’s report.
- When not purchasing in the suburbs, buyers focused on small towns (16 percent, down from 19 percent).
- Increasingly, senior buyers are looking to resort or recreational areas (17 percent up from 13 percent the previous year).
Takeaways
- Although you may assume that your senior buyer has “been there, done that” when it comes to the home purchase process, many may not have purchased a home in decades and may need significant hand-holding and education this time around. Ensure that you are communicating and providing information with these buyers just as you would with younger buyers.
- As indicated by other statistics in this year’s report, downsizing is out of fashion. Don’t assume that your senior buyers all want to move into a small condo and take it easy. Even those who are looking at senior-focused housing are looking primarily for single-family homes, recreation, and amenities to support an active, independent lifestyle.
4. Investors
This year’s survey asked about iBuyers as a selling method along with FSBOs and traditional home sales processes. Fewer than 1 percent of sellers reported using these online-only programs, perhaps because of the higher home prices they could expect from a traditional home sale.
Since 2007, condo sales have steadily decreased from 11 percent and made up only 4 percent of sales in 2021. This may make them a good investment for buy-and-hold portfolios but a questionable choice for flips. As always, this statistic may apply in some markets more than others.
Suburbs and subdivisions made up the largest percentage of home purchases, fueled in part by the pandemic-related desire for more outdoor space and larger square footage. This indicates both a significant opportunity for investors who own rental properties in these areas and a purchase opportunity in formerly hot in-town neighborhoods.
In the Northeast, 30 percent of recent buyers purchased in a small town compared to only 17 percent in the South. This may be part of a pandemic-related move to more rural areas, or it may represent a significant long-term difference between buyer motivations in the two regions.
Takeaways
- Although many investors go all-in on online outreach to homesellers, they may have more luck working with wholesalers and investor-savvy real estate agents to identify potential pre-market and off-market acquisitions.
- Remember that what works in one market, region or sector may not work in another. Investors looking to diversify their portfolio with acquisitions in other markets should not expect their current strategy to work for every part of the country. Keep an eye on trends and demand that’s specific to the area you’re interested in to make solid decisions about your investment strategy.
5. Brokers, indies, broker-owners
For brokers, it is important to develop a high-level understanding of what motivates buyers and sellers overall. NAR’s report found that the primary reason for purchasing a home is still a personal desire for homeownership, at 28 percent for all buyers and 65 percent for first-time homebuyers.
Long-distance relocation does not seem to be a significant trend as the median distance between the home sold and home purchased was only 15 miles. This also indicates the importance of messaging surrounding a streamlined approach to both buying and selling as a single, cohesive process.
Buyers continue to see their home purchase as a good financial investment at 86 percent. They expect to live in the homes they purchased for a median length of 12 years, while 18 percent said that they were never moving.
Buyers who used an agent typically spent two weeks searching before contacting an agent. First-time buyers searched for a median of 10 weeks overall, while repeat buyers and buyers who used an agent searched for a median of eight weeks.
Takeaways
- Messaging should combine the personal desire for homeownership with the desire to make good financial decisions. This might be an especially potent message for younger buyers who experience increased economic anxiety resulting from a childhood spent in the aftermath of the Great Recession.
- The report identified finding the right home as a primary concern (52 percent) for buyers, and the two-week difference between those working with an agent early in the process and those who do not seems to bear this out. This statistic can be a valuable one to focus on when reassuring buyers, especially in competitive, low inventory markets.
- Although we think of ourselves as a transient population, the fact that 18 percent of buyers feel they have found their forever home shows that there are still clients who are looking for a sense of permanence. This may translate into a powerful emotional appeal in your marketing.
6. Teams
Lead generation continues to hinge on referrals, with 47 percent of buyers using an agent who was referred to them by a friend, neighbor or relative. Another 13 percent used an agent that they had worked with in the past to buy or sell a home. A whopping 68 percent of sellers found their agent through a referral.
Despite a sense of competition among agents, 73 percent of buyers interviewed only one real estate agent during their home search. This figure rose to 82 percent among sellers who contacted only one agent before finding the right one for their home sale.
Although many agents reach out to renters when seeking first-time homebuyers, the report identified a steady share (21 percent) moving directly from a family member or friend’s home into homebuying. This figure may have been skewed due in part to adult children moving back in with parents during quarantine as well as to those living at home while saving up for a competitive down payment.
Although we think of clients as being primarily focused on online communication, the phone still plays an important role for most and is usually (29 percent) the first choice when initially contacting an agent.
For buyers, 74 percent felt that it was important that their agent call them personally to keep them informed during the process. However, they also wanted the option of communicating via text message.
What should your marketing and image convey to buyers? Honesty and integrity. It was the most important factor to 20 percent of respondents and was considered very important by 97 percent.
Do a great job for your sellers, and they’ll let people know about it. Typically, they have already recommended their agent twice since selling their home. Some 27 percent have recommended their agent four or more times since selling. Altogether, 89 percent said that they would definitely or probably recommend their agent to others.
Sellers are focused on the following when choosing a listing agent: competitive pricing (21 percent), marketing (20 percent), timeframe (16 percent) and fix-up recommendations to sell the home for more (16 percent).
Although the first three have stayed fairly steady over the years, according to the report, more and more sellers are looking for agents who offer options for increasing their home’s value through smart improvements.
Takeaways
- Rather than looking to generate cold leads and convince them to work with you, both buyer and listing agents should be looking to past clients for referrals. This means there should be an increasing focus on sphere of influence marketing and communication aimed at previous clients and built-in systems for receiving and responding to referrals. This may also help to reach that untapped first-time buyer market by providing information to parents for their adult children.
- Focus less on how you stack up to other agents in your market and more on how you provide service to your clients. Once potential buyers and sellers reach out to you, the numbers show that they are overwhelmingly likely to choose you if you provide the information they’re looking for coupled with a sense of trustworthiness.
- While you want to offer clients plenty of options for communication, nothing beats an old-fashioned phone call. For best results, make a call and follow up with a text or email to ensure optimal outreach and to keep the information flow in writing.
- Provide potential sellers with content and communication aimed at helping them optimize their home’s value through smart improvements, updates and upgrades throughout the homeownership lifecycle.
Although it might be easy to dismiss some of these trends as the product of a one-time event, that would be a mistake. As the ongoing impact of COVID and its variants continues to develop, these statistics may offer the first glimpses of movements that will continue to grow and inform our marketing and client services for years to come.
Christy Murdock is a Realtor, freelance writer, coach and consultant and the owner of Writing Real Estate. She is also the creator of the online course Crafting the Property Description: The Step-by-Step Formula for Reluctant Real Estate Writers. Follow Writing Real Estate on Twitter, Instagram and YouTube.
