Florida Association of Realtors Buyer Motivation Study

1
Florida Association of RealtorsBuyer Motivation
Study

• Sept 2008

2
Survey Objectives

• The market research study focuses on recent home
  buyers. Recent home buyers and home sellers are
  defined as consumers who have bought a home in
  Florida within three months of the time the
  research is conducted.
• Recent home buyers are defined in this narrow
  period of time so that we can
• Get their opinions, attitudes, and experience
  while the experience is fresh in their minds,
  their remembrances will be high, and the data
  will indicative of the market at that time.
• Find out what motivates home buyers to purchase
  in this type of market so that Florida REALTORS
  can more effectively motivate other potential
  buyers to consummate the purchase of a home.

3
Methodology

• An important consideration is that we are
  measuring member perceptions.
• Perceptions are never wrong they can, however,
  be factually incorrect.
• When home buyers make decisions, perceptions are
  more important than the facts.

4
Methodology

• Telephone interview methodology.
• 800 surveys with recent Florida home buyers
  (i.e., those that bought in the last three months
  April, May, or June 2008).
• Results are statistically projectable at two
  standard deviations (a 95 confidence level).
• Overall data is subject to a sampling error of
  /- 3.5.
• Subsets of the total sample will have a higher
  sampling error.

5
Methodology

• The survey questionnaire and more detailed
  statistical breakdowns and tabulations of the
  survey data are included separately.
• Survey data is broken down based on the following
  criteria
• Total
• Southern Region (counties included in each region
  are identified on the questionnaire)
• Central Region
• Northern Region
• Age Under 46 (46 is the median age)
• Age 46 Over
• Home Price lt 225K (225,000 is the median home
  price)
• Home Price 225K higher

6
Key Conclusions

• The confluence of three beliefs appear to drive
  recent home purchases
• Home prices are or have bottomed out (hence,
  improved affordability)
• Mortgage interest rates are likely to increase
  (which will hurt home affordability)
• The selection of desirable homes has never been
  better (thus, they have the ability to negotiate
  very favorable terms and conditions).

7
Key Conclusions

• 15 of all recent home buyers were first-time
  home buyers.
• 15 of recent home buyers bought a home that was
  a foreclosure, a REO, a bank-owned property, a
  short-sale property, or other similar type of
  distressed sale.
• This type of distressed home purchase was highest
  in the Southern Region (21).
• Market conditions played a major role in their
  recent decision to buy
• Price decreases motivated us
  69
• Low interest rates helped us move to a better
  location, neighborhood 42
• Likelihood or concern that interest rates will
  move up motivated us 37

8
Key Conclusions

• For the next three years, most recent home buyers
  are uncertain about whether home prices in their
  neighborhood will go up, remain flat, or go down.
• Recent home buyers who think home prices will go
  up over a set number of years were as follows
• Next one year 13 believe prices will go up
• Next three years 19
• Next five years 41
• Next 10 years 63
• As the previous figures indicate, the further out
  we get into the future the more optimistic recent
  home buyers are.
• The tipping point about the belief that home
  prices will go up appears to be after three years.

9
Key Conclusions

• Most recent home buyers got a fixed rate mortgage
  (55).
• Another 45 got an adjustable rate mortgage.
• Zero percent down mortgages appears to have gone
  away.
• The average recent home buyer put down 19.33 as
  their down payment.
• None of the recent home buyers put down 0.
• 39 put down less than 20.
• 61 made a down payment of 20 or more.
• Most recent home buyers considered it very
  difficult to obtain mortgage financing rating it
  a mean score of 8.53 out of 10 (median 9.0)
  where 10 is very difficult.

10
Key Conclusions

• The average recent home buyer took about seven
  months to make their most recent home purchase
  so, obviously recent home buyers took a long time
  to shop the market.
• 67 of recent home buyers took six or more months
  to look for the home they purchased.
• The flippers and investors have largely left the
  market. In a similar regard, for nearly all (97)
  recent home buyers the purchase was for their
  primary residence.

11
Key Conclusions

• Not only were recent home buyers taking a long
  time to search for a new home (over seven
  months), 77 made one or more offers on another
  home before they made an offer on their current
  purchase.
• The average home buyer made offers on 3.21 other
  homes, this means the home buyers made a total
  of 4.21 home offers to complete their purchase.

12
Key Conclusions

• 31 of recent home buyers are unsure of how long
  they plan to stay in the home they most recently
  purchased.
• Among those who could make an approximation, the
  average recent home buyer planned on staying an
  average of 4.23 years. The previous figure also
  coincides with when most think the market will
  show appreciation.

13
First Time Home BuyersAs A Percentage Of Total

• 15 of all recent home buyers were first time
  home buyers.
• First time home buyers were
• Least prevalent in the Central Region (9)
• Most evident in
• The age group under 46 years (19)
• Where the home price is under 225K

14
First Time Home BuyersAs A Percentage Of Total
15
Type Of Home Purchased

• Most recent home buyers bought either an existing
  resale home (60) or brand new construction
  (35).
• 43 of recent home buyers bought a single-family
  detached home.
• Another 36 purchased a townhome.
• 21 bought a condominium.
• Condominium purchases were highest in the
  Southern Region (44).
• Purchases of single-family detached homes were
  the highest in the Northern Region (57) and the
  Central Region (49).

16
Type Of Home Purchased
17
Type Of Home Purchased
18
Home Bought Was A Foreclosure, A REO,A
Bank-owned Property, A Short-sale Property, Or
Other Similar Type Of Distressed Sale

• 15 of recent home buyers bought a home that was
  a foreclosure, a REO, a bank-owned property, a
  short-sale property, or other similar type of
  distressed sale.
• This type of distressed home purchase was highest
  in the Southern Region (21).

19
Home Bought Was A Foreclosure, A REO,A
Bank-owned Property, A Short-sale Property, Or
Other Similar Type Of Distressed Sale
20
Home Bought Was Listed On The MLS

• 78 of recent home buyers indicated that the home
  they purchased was listed on the MLS.

21
Home Bought Was Listed On The MLS
16 Unsure
22
The Primary Reason For Buying Your Home

• The primary reason for their recent home purchase
  was
• Price decreases allowed us to buy 29
• Tired of renting 19
• Obtained favorable price/ financing 15
• Desired better/other location 12
• Change in family status 11
• Price decreases were the greatest motivator for
  recent home buyers in the Northern Region and
  least important for those in the Southern Region.

23
The Primary Reason For Buying Your Home
24
The Primary Reason For Buying Your Home
25
Media Impacted YourHome Purchase Decision

• 69 of recent home buyers indicated the media
  impacted their home purchase this was
  especially the case in the Central Region.

26
Media Impacted YourHome Purchase Decision
27
Role Market Conditions Played In Your Decision To
Buy Your Home

• The role did market conditions played in their
  recent decision to buy a home were
• Price decreases motivated us
  69
• Low interest rates helped us move to a better
  location, neighborhood 42
• Belief that interest rates will move up motivated
  us 38

28
Role Market Conditions Played In Your Decision To
Buy Your Home
29
Role Market Conditions Played In Your Decision To
Buy Your Home
30
Do you think home prices in your neighborhood
will go up, down, or stay flat in

• For the next three years, most recent home buyers
  are uncertain about whether home prices in their
  neighborhood will go up, remain flat, or go down.
• Recent home buyers who think home prices will go
  up over a set number of years were as follows
• Next one year 13 believe prices will go up
• Next three years 19
• Next five years 41
• Next 10 years 63
• For the three year to 10 year range recent home
  buyers in the Northern Region are the most
  optimistic that home prices will go up.
• As the previous figures indicate, the further out
  we get into the future the more optimist recent
  home buyers are.
• The tipping point about the belief that home
  prices will go up appears to be after three years.

31
Do you think home prices in your neighborhood
will go up, down, or stay flat in
32
Do you think home prices in your neighborhood
will go up, down, or stay flat in 1 year?
33
Do you think home prices in your neighborhood
will go up, down, or stay flat in 3 years?
34
Do you think home prices in your neighborhood
will go up, down, or stay flat in 5 years?
35
Do you think home prices in your neighborhood
will go up, down, or stay flat in 10 years?
36
Approximate Square FootageOf Home Purchased

• The average home purchased was 1680 square feet.
• There were only minor differences by region.

37
Approximate Square FootageOf Home Purchased
38
Purchase Price Of Home Purchased

• The average home purchased was 267,643 (Median
  225,000).
• The highest mean home price was in the Southern
  Region (312,569).
• The lowest mean home price was in the Northern
  Region (237,026).

39
Purchase Price Of Home Purchased
40
Price Of Home Purchased
41
Price Of Home Purchased
42
Type of Mortgage

• Most recent home buyers got a fixed rate mortgage
  (55).
• Another 45 got an adjustable rate mortgage.
• Those most likely to get a fixed rate mortgage
  were in the Northern Region (76)
• Those most likely to get an adjustable rate
  mortgage were
• Southern Region (56)
• Central Region (54)
• Those who purchased a home 225,000 and higher

43
About Their Mortgage

• Recent home buyers indicated that their mortgage
  was
• Arranged by a mortgage loan broker 81
• Arranged by your real estate agent 24
• An Interest-Only Mortgage 18
• 84 of recent home buyers indicated that they
  know the terms of their mortgage.
• Those most likely to say they knew the terms of
  mortgage were
• Northern Region 92
• Those who purchased a home 225,000 and higher 87

44
Type of Mortgage
45
Details About Their Mortgage
46
Home Buyers Who Know TheTerms Of Their Mortgage
47
Received Housing Finance Assistance
48
Please rate how easy or difficult it was to
obtain financing on a scale of 1 to 10, with 1
being very easy and 10 being very difficult?

• Most recent home buyers considered it very
  difficult to obtain mortgage financing rating it
  a mean score of 8.53 out of 10 (median 9.0)
  where 10 is very difficult.

49
Please rate how easy or difficult it was to
obtain financing on a scale of 1 to 10, with 1
being very easy and 10 being very difficult?
Median 9
50
How much did you put down as your down payment
for the home purchase?

• The average recent home buyer but down 19.33 as
  their down payment.
• None of the recent home buyers put down 0.
• 39 put down less than 20.
• 61 made a down payment of 20 or more.

51
How much did you put down as your down payment
for the home purchase?
52
The Escrow Closing Process

• The average time to close escrow was 5.28 weeks
  with a minimum of four weeks and a maximum of
  seven weeks.

53
How many weeks did it take togo through the
closing process?
Mean 5.28
54
How many weeks did it take togo through the
closing process?
55
How many months had you been looking for a home
prior to finding the home you bought?

• The average recent home buyer took about seven
  months to make their most recent home purchase
  so, obviously recent home buyers took a long time
  to shop the market.
• 67 of recent home buyers took six or more months
  to look for the home they purchased.

56
How many months had you been looking for a home
prior to finding the home you bought?
Mean 7.05
57
How many months had you been looking for a home
prior to finding the home you bought?
58
Home Purchased As Their Primary Residence

• For nearly all (97) recent home buyers the
  purchase was for their primary residence.

59
Home Purchased Is Their Primary Residence
60
How many years do you plan to stay at your
current home before selling it?

• 31 of recent home buyers are unsure of how long
  they plan to stay in the home they most recently
  purchased.
• Among those who could make an approximation, the
  average recent home buyer planned on staying an
  average of 4.23 years. The previous figure also
  coincides with when most think the market will
  show appreciation.

61
How many years do you plan to stay at your
current home before selling it?
Mean 4.23
31 are unsure and are excluded from the
calculation of the mean
62
How many years do you plan to stay at your
current home before selling it?
31 are unsure and are excluded from the
calculation of the mean
63
Made An Offer On Other Homes Before Finding And
Buying This One

• Not only were recent home buyers taking a long
  time to search for a new home (over seven
  months), 77 made one or more offers another home
  before they made an offer on their current
  purchase.
• The average home buyer made offers on 3.21 other
  homes, this means the home buyers made a total
  of 4.21 home offers to complete their purchase.
• The main reasons their other offers did not go
  through were
• Seller would not accept price offered 44
• Could not get an acceptable mortgage 36

64
Made An Offer On Other Homes Before Finding And
Buying This One
65
Reasons Previous Offer(s)Did Not Result In A
Home Purchase
66
Reasons Previous Offer(s)Did Not Result In A
Home Purchase
67
Reasons Previous Offer(s)Did Not Result In A
Home Purchase
68
In addition to the offer on the home you
purchased, on how many other properties did you
make an offer?
Mean 3.21, this means the home buyers made a
total of 4.21 home offers
69
In addition to the offer on the home you
purchased, on how many other properties did you
make an offer?
70
Used A Real Estate Agent InYour Most Recent Home
Purchase

• 86 of recent home buyers used a real estate
  agent in their most recent home purchase.
• Most recent home buyers (68) found their real
  estate agent on some facet of the Internet.
• The major reasons for selecting their real estate
  agent were
• Seemed like he/she would be the most aggressive
  on my behalf 40
• Seemed the agent would get me the lowest
  price 24
• These statistics indicate that recent home buyers
  wanted an agent that would get them the best
  value.

71
Used A Real Estate Agent InYour Most Recent Home
Purchase
72
Your Real Estate Agent Was Also The Listing Agent
(Sellers Agent) For The Home You Purchased
73
How You Found Your Real Estate Agent
74
Single Most Important Reason For Selecting The
Agent That You Used InYour Recent Home Purchase
There were no statistically significant
differences by subsets of the total sample.
75
Shopping For A Real Estate Agent

• Not only did recent home buyers take a long time
  to search for a new home (over seven months),
  make multiple offers to consummate a purchase
  (4.21) they also shopped aggressively for a
  real estate agent by interviewing an average of
  4.32 real estate agents.
• The areas recent home buyers needed the most
  assistance from their real estate agent were
• Price negotiation 44
• Determine what comparable homes were selling
  for 35
• Find the right home to purchase 18

76
How many agents did you interviewprior to
selecting the agent you used inyour recent home
purchase?
Mean 4.32
77
How many agents did you interviewprior to
selecting the agent you used inyour recent home
purchase?
78
Area You Needed The Most Help FromYour Real
Estate Agent
79
Area You Needed The Most Help FromYour Real
Estate Agent
80
Area You Needed The Most Help FromYour Real
Estate Agent
81
Satisfaction With Various AspectsOf The Home
Buying Process

• Recent home buyers were asked to rate their
  satisfaction of their real estate agent on
  various aspects of the home buying process,
  including
• Information on neighborhood schools, crime,
  etc.
• Understanding the home buying process
• Information on housing market conditions that
  your agent provided
• Your real estate agents negotiating skills
• The assistance your real estate agent provided in
  searching for a home
• Overall, how well your real estate agent kept you
  informed
• Overall process of finding a home
• Value received for what your real estate agent
  was paid
• Overall satisfaction with your real estate agent
• Recent home buyers were asked to rate each on a
  scale of 1 to 5, where 5 is most satisfied, 3 is
  average level of satisfaction, and 1 is least
  satisfied.

82
Satisfaction With Various AspectsOf The Home
Buying Process

• Recent home buyers registered reasonably high
  level of satisfaction with all nine attributes.
  More importantly very few recent home buyers gave
  ratings on any aspect of the home buying process
  below a three.
• Recent home buyers recorded their highest level
  of satisfaction with their real estate agent for
• Information on housing market conditions that
  your agent provided 4.19
• Value received for what your real estate agent
  was paid 3.78
• The assistance your real estate agent provided in
  searching for a home 3.71
• Overall satisfaction with your real estate
  agent 3.66

83
Satisfaction With Various AspectsOf The Home
Buying Process
Mean Score, on a scale of 1 to 5, where 5 is most
satisfied, 3 is average level of satisfaction,
and 1 is least satisfied.
84
Advice You Would Give ToOther Florida Home Buyers

• Advice recent home buyers would give other home
  buyers included
• Do your own homework on the Internet 58
• Get a good understanding of the type of mortgage
  you are getting 48
• Check the agent's references 45
• Make sure the agent pre-qualifies homes before
  showing them to you 41
• Get pre-qualified for a mortgage by more than one
  lender 37
• Find out how frequently the agent is going to be
  in contact with you 20
• Make any agent you use prove they will negotiate
  hard for you 16
• Get your financing locked in as soon as
  possible 14

85
Advice You Would Give ToOther Florida Home Buyers
86
Advice You Would Give ToOther Florida Home
BuyersContinued From Previous Slide
87
Advice You Would Give ToOther Florida Home Buyers
88
Advice You Would Give ToOther Florida Home Buyers
89
Advice You Would Give ToReal Estate Agents

• Advice recent home buyers would give real estate
  agents included
• Show you can negotiate aggressively for the
  buyer 44
• Give quality info on where market is going,
  why 38
• Provide references for lenders who will
  perform 36
• Improve the quality of communications 35
• Listen to my needs better 34
• Provide buyer references 32
• Provide information on where interest rates are
  going 30
• Improve the speed of communications 17

90
Advice You Would Give ToReal Estate Agents
91
Advice You Would Give ToReal Estate Agents
92
Background On Recent Home Buyers
93
Gender
94
Mean Age
95
Household Income
96
Marital Status