Share
Brokers already know many of the issues affecting their local marketplaces, but information in the broad scope helps put things into context. Jessica Lautz, deputy chief economist and vice president of research at NAR, provided data points during the REALTORS® Legislative Meetings in Washington, D.C., to help brokers understand what stats play a part in their market.
Bidding wars. Inventory issues and migration patterns are driving division in the national real estate market, Lautz said. Current data shows that for every house listed, there’s an average of three offers on that house. Some areas of the country are still feeling the effects of multiple offers while others aren’t seeing this issue at all, she said.
Issues affecting first-time buyers. Buyers who are able to forego financing still make up 17% of the market at the moment, making it difficult for first-timers to secure a home, especially in areas where heavy migration compounds inventory issues. Cash buyers aren’t just investors, though, Lautz pointed out. “Buyers who have been in their homes a long time and built up equity and are now ready to retire to a less expensive area are paying cash,” she said.
Mass migration. Migration is largely driven by two factors: retirement and remote work. Data shows that the Sunbelt region is the most popular destination for people who are moving, while people are leaving the Northeast, parts of the Great Lakes region and sections of the West. Traditionally, home buyers in the past moved an average of 10 to 15 miles when purchasing a home, but that mileage has shifted to upwards of 50 miles. Driving this trend is affordability, retirement and remote work, allowing homeowners more flexibility to choose where they live.
Distressed sales and foreclosures. Headlines often warn of calamity when it comes to the market, stressing that mass foreclosures are coming, Lautz said. But the data paints a very different picture. Right now, distressed sales and foreclosures account for less than 1% of the market. A combination of home price strength and equity gains make it unlikely that an influx of foreclosures will enter the market.
Generational breakdown of the marketplace. First-time home buyers represent less than 30% of the market, which is historically low, according to NAR’s 2022 Profile of Home Buyers and Sellers. While millennials for quite some time made up the largest segment of buyers, pandemic-fueled price increases and cash buyers have changed that. Millennials are largely first-time home buyers and, therefore, often struggle to secure a home in the current marketplace. Baby boomers who have the equity and cash to purchase homes now make up the largest segment of the market, and the entrance of Gen-Z is also edging out millennials.
Lautz said that when it comes to boomers, certain misconceptions persist in the real estate industry. They operate quite differently than seniors of the past. Most are not downsizing, they want smart-home tech and green features and they have the equity or cash to purchase what they want. Typically, they’re also moving about 90 miles or more to their desired retirement locations.
