Low inventory, rising home prices, and higher interest rates aren’t keeping people from closing on a home, according to the results of a survey released today by realtor.com®.
The real estate site reports 34% of those who purchased a home were unfazed by price and rate hikes, 51% didn’t pay above asking price, and 42% only made one or two offers.
According to the survey, the typical profile of a successful buyer in the first half of 2018 is someone who was in the market for six months or less (61%), made four or fewer offers (72%), and bought a three-bedroom, two-bath home. Those that had an easiest time buying a home were older buyers, above the age of 55 years old.
The survey was conducted earlier this month by Harris Research and includes online responses from more than 1,000 people who closed in 2018.
“Successful home buyers in 2018 have been exceptionally well-qualified,” said Danielle Hale, chief economist for realtor.com®. “We are seeing the impact of the inventory crisis in the data, and it’s holding back home sales. While would-be buyers struggle with limited inventory, rising prices and mortgage rates, those who closed were undeterred by today’s buyer frenzy. This is likely attributed to their experience, cash, and perhaps the market they’ve chosen to buy in.”
Rising rates and prices impacted the majority of buyers
Home prices set new records this spring. Two-thirds of closers revealed their search was impacted by rising prices or rates. In fact, 22% indicated increased costs forced them to look for a less expensive home. 19% said they had to increase their monthly mortgage budget and the same share said they had to look in a different neighborhood.
Conversely, 34% of those who closed indicated that rising prices and mortgage rates had no impact on their purchase. 54% of buyers above 55 years old indicated no impact, while 31% of buyers between the ages of 35 and 54 years old, and 23% of those 18-34 years old reported this.
Most closers didn’t pay above asking, but put down more than 20%
Despite this season’s notorious bidding wars, the majority of successful home buyers, 51%, didn’t have to pay more than asking price. In fact, 28% of buyers paid less than asking price and 23% paid full asking. This also varied by age, only 24% of those over 55 years old paid over asking, compared to 59% of those 18-34 years old and 56% of those 35-54 years old.
Although the majority didn’t offer above asking, these successful buyers were able to entice sellers with cash. Mortgage data* from the first half of 2018 shows more than 30% of buyers put more than 20% down. This data also shows that larger down payments are more common among older buyers with 22% of those aged 18-34, 32% of those aged 35-54, and 51% of those aged 55 and older putting more than 20% down.
Fast closings with limited number of offers
A large share of those who bought in 2018 closed very quickly: 25% of respondents started their search and closed within two months. More than 60% closed within six months and only 8% took one year or more after starting their search. Older buyers were more likely to close quickly with 34% of those 55-plus closing within two months, compared to 23% of 35-54-year-olds and 21% of 25-34-year-olds.
Additionally, nearly half of all buyers, 42%, were able close on a home after one to two offers. 58% had to make three or more offers. Again, older buyers came out on top with 64% of those 55-plus making only one or two offers, compared to 38% of those 35-54 years old and 30% of 18-34-year-olds. Additionally, one third of 18-54-year-olds had to make five or more offers.
Checking listings websites and cash are the key to getting ahead
When buyers were asked about the most effective tactic they used to get ahead, the No. 1 strategy cited was checking listings websites everyday, indicated by 30%. 24% reported putting more than 20% down and the same share reported using all cash, followed by 20% of respondents who used each of the following tactics: set a price alert, offered above asking, and used a larger earnest money deposit.
