Home buyers and sellers are looking to work with real estate professionals now more than ever as they navigate complex transactions, bidding wars and severely limited housing inventory, according to the National Association of REALTORS®’ newly released 2023 Profile of Home Buyers and Sellers. Although the vast majority of home searches start online, 89% of buyers and sellers in the last year used a real estate agent, the report finds. That’s up from 86% the previous year.
“It’s an infrequent transaction, completed about two to three times in most people’s lives,” says James Dwiggins, cofounder and CEO of NextHome Inc. in San Francisco. “It’s the most expensive thing most Americans will ever spend their money on. It’s also the largest driver of generational wealth in the U.S. I believe buyers and sellers will continue to still want to have somebody by their side to educate them on how to do this. There are too many mistakes and risks that could happen by doing it on your own.”
But Dwiggins stresses the urgent need for real estate pros to articulate their value—especially in the wake of the Sitzer/Burnett trial verdict—so that home buyers and sellers understand how you partner with them to ensure a smooth transaction. It’s the right time to drive this message home as buyers face increasing affordability constraints and sellers are reluctant to unload their properties. (Learn more about communicating your value as a REALTOR® at competition.realtor.)
Here are a few takeaways from NAR’s 2023 Profile of Home Buyers and Sellers.
1. Consumers heavily rely on your expertise.
Buyers say the top items for which they seek help from a real estate agent include:
- Finding the right home.
- Understanding the homebuying process.
- Pointing out unnoticed property features and faults.
- Connecting with home service providers.
- Negotiating better terms in the home sale contract.
Sellers, too, are increasingly turning to agents, with only 7% selling as a FSBO in the last year—which matches the all-time low recorded in 2021. FSBOs continue to not fare as well in the market as professionally represented homes: FSBOs sold at a median price of $310,000 in the last year, while that figure was $405,000 for listed homes.
“Having a REALTOR® help you navigate the homebuying and selling process provides peace of mind, especially in a challenging market with high prices, elevated mortgage rates and limited inventory,” says NAR President Tracy Kasper.
2. They’re not judging you based on your commission.
Only 5% of sellers cited the agent’s commission as an important factor in choosing a professional to work with. Sellers rated factors such as reputation, trustworthiness and neighborhood knowledge as most important. Real estate pros say that 50% of the time, they’re the ones who initiate the discussion about compensation.
3. Buyers with higher incomes remain in the market.
The income of home buyers in the market increased 22% year over year—the largest upward shift on record. This reflects the rise in home prices and how it has affected the pool of buyers who can afford a home. The median household income for home buyers rose to $107,000, up from $88,000 last year. “Given the erosion of housing affordability due to higher home prices and mortgage rates, the household income for those who successfully purchased homes jumped by nearly $20,000 and topped six figures for only the second time in our records,” says Jessica Lautz, NAR’s deputy chief economist.
4. First-timers return with more financial options.
First-time buyers reached a 32% market share, a notable uptick from last year’s historic low of 26%. But that’s still below the historical norm of 38% market share for first-time buyers, whose median age is 35. “First-time buyers tiptoed back into the market this year with less competition and fewer multiple-offer scenarios,” Lautz says. First-timers’ median household income is nearly $25,000 higher than last year, and they’re more likely to use other financial assets—such as investment yields or loans from family and friends—to purchase a home, Lautz adds.
5. Down payments are the highest in 20 years.
The typical down payment for first-time buyers was 8% in 2023—the highest since 1997, when it was 9%. Repeat buyers averaged a 19% down payment, which is the highest since 2005, when it was 21%. Repeat buyers are increasingly leveraging the equity from their previous home to make a larger down payment on the next, the report notes. But for first-time buyers, saving for a down payment remains a significant financial hurdle. First-time buyers increasingly rely on various financial assets to make a down payment:
- Savings: 71%
- Loan from a relative or friend: 23%
- Stocks and bonds: 11%
- 401(k) retirement fund or pension: 9%
- IRA retirement fund: 2%
- Cryptocurrency: 2%
6. Sellers are getting what they want.
Amid the national housing shortage, sellers have the upper hand. In 2023, sellers typically sold their property at 100% of the asking price—the same as last year—and a third sold above their ask. Seventy-seven percent of sellers say they didn’t have to offer any incentives to attract buyers. Homes are selling fast, at a median of only two weeks. This means buyers must come to the market prepared to move quickly: “In a still-competitive housing market, more well-off home buyers were able to have their bids accepted by offering larger down payments and even paying cash,” Lautz says.
7. Single buyers are a growing force.
Household composition is shifting. Fifty-nine percent of recent buyers were married couples, the lowest share since 2010. On the other hand, homeownership among single households increased: Single females comprised 19% of the market, while single males made up 10%. Further, 70% of recent buyers did not have a child under the age of 18 in their home—the highest share on record. For comparison, in 1985, 42% of households did not have a child under the age of 18.
8. Multigenerational housing remains popular.
Fourteen percent of all buyers were motivated to purchase a home in order to accommodate multiple generations in their family. The most commonly cited reasons for embracing multigenerational living include taking care of aging parents, saving on living expenses and accommodating relatives over the age of 18 who are moving back home.
9. Homeowners want to stay where they are.
More buyers intend to stay in their home longer. Sellers in 2023 typically lived in their home for 10 years, maintaining a historically high level. Overall, buyers say they expect to live in their home for a median of 15 years; 22% say they will never move. Homeownership tenure is highest among those 45 to 64 years old and shortest among those between 18 and 44.
10. Buyers are more racially and ethnically diverse.
“Home buyers in the past year were more diverse, both racially and ethnically, with increases noted among minority buyers, buyers who were born outside of the U.S. and buyers whose primary language is not English,” Lautz says. “This shows encouraging signs that the homeownership rate may narrow in the future as more minority buyers enter the market.” For now, Whites still have the highest homeownership rate at 81%, although that’s down from 88% last year. But the homeownership rate increased to 7% for Black and Hispanic buyers, 6% for Asian/Pacific Islanders and 6% for those who identify as another race. Ten percent of buyers were born outside the U.S., up from 8% last year.
11. The new-home market is attracting more buyers.
Slightly more buyers this year reported purchasing a new home than last year, as the inventory of existing homes remained tight. Most recent buyers who purchased a newly built home say they did so to avoid renovations and potential problems with old plumbing or electricity. On the other hand, buyers who purchased an existing home say they considered it more affordable than a new home.
12. People aren’t moving as far away.
The median distance that sellers moved to a new home dropped from 50 miles to just 20 miles this year. That’s more in line with historical norms around 15 miles. Significantly fewer moves in 2023 involved crossing state lines than in 2022. The most common reasons cited for selling a home were the desire to move closer to family and friends (23%), live in a larger home (13%) or a life change like a marriage, divorce or having a new child (10%).