The National Association of REALTORS®’s 2016 Profile of Home Buyers and Sellers report shows that homeowners are consistently purchasing homes that are bigger in size.
The idea of homeownership is the top reason for many Americans to enter the homebuying process, and is also the top reason for approximately 67 percent of first time homebuyers. The report found that 31 percent of all buyers aspire to purchase a home of their own, followed by the desire for a larger home (10 percent), a job-related relocation or move (8 percent), and a change in family situation (8 percent).
Buyers continued to trade up and buy bigger homes than last year in five out of nine U.S. regions. Roughly 46 percent of all buyers upgraded the size of their home, which increased from 42 percent from last year. In the 2015 report, buyers reported that they were looking for homes similar in size at 29 percent compared to 26 percent in 2016.
New England, East North Central, South Atlantic, Mountain, and Pacific were the top regions that continued to trade up in size. The share of buyers that traded up in size in West North Central last year decreased to six percent in 2016 from 13 percent in 2015. The Middle Atlantic, East South Central, and West South Central were the regions with the share of buyers that traded up in 2015, but fell in 2016.
Although shares in these regions have fallen a few percentage points, the desire for a larger home was the second most common reason in almost every area. The exceptions were in the West North Central, which cited the desire to be closer to family, and the West South Central, which cited a job relocation as the second most common reason to purchase a home.
A reason for the purchasing power shift is homebuyers have more equity from selling their previous homes to purchase another, and many homes were found to be worth less than they owed on their mortgage. About 17 percent reported waiting or stalling to sell their home in 2014, which dropped to 13 percent in 2015, and again to 12 percent in 2016. Sellers also reported that they sold their homes for a median of $43,100 more than they purchased it, which is up from $40,000 in 2015 and $30,100 in 2014. Approximately 18 percent of homebuyers said that the most common reason for selling a home in 2016 was that the home was too small at 18 percent, which is up from 16 percent in 2015.
The report detailed homebuyer demographics, some of which have remained consistent over the course of several years. The typical seller age was 54, which has remained the same for the past two years. The median household income in 2015 was $100,700, which down from $104,000 in 2014. At approximately 22 percent, sellers aged 35 to 44 years were the largest age group to sell homes in 2015. Trends indicate that repeat buyers have been able to sell their homes at a higher price in order to trade up and purchase larger homes. Sellers aged 55 to 64 also made up 22 percent of all sellers, possibly looking to downsize to a smaller home as they near retirement.