2022 Profile of Home Buyers and Sellers: Highlights

The National Association of REALTORS (NAR) has published its annual report. The report is based on surveys of recent home buyers including those who sold one property to buy another. The survey consisted of 129 questions mailed to 153,045 recent home buyers. These reports began in 1981 with just 59 questions and are intended to provide insight into consumer behavior, specifically their needs and expectations.

The reports are as unique as the economic, social and demographic environment. The time period covered ran from July 2021 through June 2022 and was impacted by a number of major events including a Real Estate market in transition.

The highlights are broken down into several characteristics.

Home Buyers:

• 26% were first-time buyers, the lowest share ever recorded in these reports, down from 34%
• The typical first-time buyer was 36 years old, up from 33, and the typical repeat buyer was 59, both all-time highs for these reports
• The share of unmarried couples buying was higher than reported previously
• 22% of all buyers said that their primary reason for buying was to own their own home; the number rose to 62% for first-time buyers
• 86% of recent buyers used a Real Estate professional; 10% bought directly from the owner
• 49% used an agent to help them find the right home.

As you will see as I continue, several factors have been adversely affecting buyers, especially first-time buyers.

Homes Purchased:

• 12% bought new homes with 41% of them looking to avoid renovations and mechanical problems
• 88% bought previously-owned homes with 31% of them looking for a better price
• 79% bought detached, single-family homes
• The median distance between the recent purchase and their prior home was 50 miles, up from 15 miles as reported between 2018 and 2021
• 49% cited the quality of the neighborhood as the most important factor in selecting a location; affordability and proximity to family and friends were both cited at 37%
• The typical purchase was at the full asking price while 28% spent more than the asking price
• Typical buyers expected to live in their home for 15 years; 28% said they would never move

The Home Search Process:

• 47% started by searching online; 18% started by contacting a Real Estate agent
• 96% of buyers used online tools in their search
• Typical buyers searched for 10 weeks, up from 8 weeks, and looked at a median of five homes plus another four they only viewed online
• 86% found their agent to be a very or somewhat useful source of information
• 91% were at least somewhat satisfied with their home-buying process

As I have seen in other reports, delaying contacting a professional may have an adverse effect on buyers especially if they learn that financing requires them to do some work to “qualify”.

Financing the Home Purchase:

• 78% of recent buyers financed their purchase, down from 87%
• The typical down payment for first-time buyers was 6%; 17% for repeat buyers
• 47% used their savings for their down payment. 38% of repeat buyers used the proceeds from the sale of their home; 22% of first-time buyers used a gift or a loan from family or friends
• 26% of first-time buyers cited saving for a down payment as the most difficult step in the process
• 88% of buyers viewed a home purchase as a good financial investment

Home Sellers:

• The typical seller was 60 years old, up from 56
• 21% sold to move closer to family and friends; 11% sold due to retirement; 11% said that their neighborhood had become less desirable
• Sellers typically lived in their home for 10 years, up from 8 years
• 41% bought a larger home; 32% bought the same size home
• 39% used the same Real Estate agent to buy as they used to sell
• 86% used a Real Estate professional; 10% sold on their own, meaning without representation
• The median final selling price was 100% of the asking price, the highest since 2002
• The median time on the market was two weeks, up from one week
• 91% of sellers were at least somewhat satisfied with the selling process

FSBO Sellers (meaning For Sale By Owner or Unrepresented Sellers):

• 10% of sellers sold without representation, up from 7%
• 6% of suburban sellers sold without representation while 13% did so in rural areas
• 50% knew the buyer of their home
• FSBO homes typically sold for less than Real Estate agent-assisted sales. FSBOs sold for a median price of $225,000 compared to Real Estate agent-assisted sales at $345,000.

Sellers who do not use a Real Estate agent typically do so to save the commission. Given the wide disparity in results that merits a conversation. That being said, some sellers say they needed to save the commission to make a move. Their choice but I respectfully suggest that all sellers think about it.

This is a lot to digest. How closely these results may reflect your feelings and experiences will vary. Selling and buying Real Estate is a personal decision, often an emotional one justified with logic.

Remember, when it comes to selling or buying what is likely your biggest asset and your largest overall investment,

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not “all the same”!

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Sellers, Does Disclosing Multiple Offers on Your Property Make Sense?

That depends. What is your strategy, meaning what do you think will happen?

The Pennsylvania Association of REALTORS Listing Contract has a clause that states in part, “Unless prohibited by Seller, if Broker is asked … Broker will reveal the existence of other offers …”. Broker could mean Agent since the contract is really with the Broker.

This “conversation” should take place at the time the listing contract is being signed so that there is no misunderstanding about what the parties have agreed to do. Frankly, I am not sure that all agents really discuss what the seller is signing, that all agents completely understand the listing contract or that every seller really understands what they are signing or that they really care as long as their property gets sold. My experience as a mediator and serving on Professional Standards hearing panels has shown time and again that a number of sellers and buyers claim that they did not understand what they signed. The agents may have done their job or not. Electronic signing can make this more problematic as people rush to execute contracts and get properties on the market and under contract. How sad! Real Estate is typically our biggest asset and largest investment. Mistakes can be very costly!

At the very least, this MUST be discussed before there is any interest in a property or there could be a problem especially if the seller thinks their agent acted unethically. Absent discussing the paragraph, the “default” position as stated is that the agent has been “authorized” to disclose whether or not there are multiple offers. If asked, the answer could be yes or no.

Many buyer agents will call to ask if there are offers “in hand” or “other interest” in a property before preparing an offer; some will even call to ask before scheduling a showing. In “hot” seller’s markets these instances will increase. Why is this a concern at all?

From a buyer or buyer agent’s perspective, they may not want to waste their time pursuing a house that may be unattainable as doing so may result in their missing out on their “second choice” if a seller has or is about to sign another offer. Our multiple listing service requires that the listing status be changed within one business day of executing a contract but a lot can happen in that time. Listing agents may have advertised a due date for offers that others assume valid only to find that something was signed sooner than expected. Real Estate sales are a “moving target”. Even if I answer your question now, the answer could change.

As far as the disclosure, some buyers may be willing to “compete” so thinking that there is competition may cause them to make their “highest and best” offer at the outset. On the other hand, some may decide not to compete. Are they entitled to know anything short of an agreement of sale being signed? No they are not unless the seller grants that permission.

What should a seller do?

As far as how to respond to inquiries about “multiple offers”, a listing agent MUST have a conversation with their seller client about how to handle inquiries. We cannot lie and we cannot divulge the answer without our seller client’s permission. We can tell others that we are not authorized to answer the question, which may make others think there is competition. How they handle our response is up to them.

I do not like to disclose that we have other offers but I believe that there is a time and place for doing that. Telling others that there are no offers makes no sense, does it? Whatever other agents and sellers do, throughout any given year, I see MANY listings expire, meaning that the listing contract ran out before getting an offer signed, or get canceled, meaning that the seller and agent decided to stop working together such as when the seller decides not to sell, that advertised in their “remarks” section that there was a “multiple offer situation”. That adds a “twist”:  the listing agent is answering the question without being asked. Did the seller authorize that? The fact that these houses did not go “under contract” and sell can mean that multiple buyers thought them priced too high. Did that disclosure help the seller? Did it deter any serious buyers who may have offered enough to convince a seller to sign a purchase offer? There is no “one size fits all” answer.

There is no guarantee that, regardless of the type of market or the amount of competition, a buyer will have a “second” chance when making an offer to buy Real Estate. If they really like a house they may want to consider making their best offer at the outset. Should a buyer offer “more” if there is real or perceived competition or “less” if there isn’t? Shouldn’t they base their offer on HOW MUCH they like and want to own a house and what they can manage financially?

A market analysis is helpful as is concern about an eventual appraisal if financing is involved but why should a house be “worth more” because someone else may like it? Suppose money is “no object”? Here is the underlying question:  what is the point of making an offer on Real Estate? I believe that the goal should be to lock it up to exclude other buyers. A buyer can do a number of inspections to see if there are any “material defects”. If their interest changes, they can request repairs or credits or even terminate a sale. I do not take any of these lightly but I do feel for buyers who misjudge the market and miss out on what may have been the best house for their needs and wants.

One interesting point of contrast is that a seller may entertain any number of offers, of course they can only sign one, but a buyer can really only pursue one house. I have heard of buyers making multiple offers but that can blow up if not handled properly.

My job as a listing agent is to “protect and promote” my seller client’s best interest. They rely on my experience, training and education even if we disagree about how to manage this specific topic. As I mentioned, I do NOT like to disclose the existence of other offers generally speaking but that can change when it suits our strategy. Let me share the possibilities.

Let’s assume we have a buyer agent with a buyer interested in making an offer. When the agent calls me to ask if there are any offers, which I presume to mean “in writing” and not a mere expression of “interest” which means nothing and does not always result in an offer being written and presented, if I do not know my seller client’s thinking, absent this paragraph in the contract, I would have to say that I have not discussed that with my client, which may lead some to think there are offers or not. Either of those could hurt my client.

Suppose I have at least one offer in hand and I disclose that. Will their buyer decide not to compete or could that make them try to win? Who knows? However, having one or more offers in hand does not guarantee that a seller will sign one or even be interested in what they may have offered. Suppose I have multiple offers but all are well below the stated asking price or have contingencies or conditions that concern the seller? While that could help me convince the seller that the price is too high, what sense does it make to tell buyer agents that we have offers in hand if none are going to be signed?

The life of a listing agent would be easier if every listing had quality multiple offers to review and if telling someone that they have competition compelled them to do their best to “win” but

human beings are unpredictable. In reality, an offer can even be retracted before being signed and returned, which we call “execution and delivery”. As I often say. It is never over until the seller has the buyer’s money and the buyer has the seller’s house keys.

Here is what I suggest and my seller clients have generally agreed with my thinking:

First, I do not want to disclose whether or not we have other interest or offers in hand.

Second, when I receive an offer, after doing what I need to do before presenting it to my seller, I will look at the recent and upcoming showing activity and review any feedback I may have received. I need to think about whether anything else might be coming in. If I think there is, we need to stall to allow that to develop. However, purchase offers have expiration dates and I never assume they are flexible. Waiting for an offer that does not materialize and letting one “in hand” expire makes no sense. Some buyers will just move on to another house, especially in a competitive market.

Third, if I have received at least one offer that a seller is strongly considering signing and someone inquires about the existence of any offers in hand, I will ask my seller for permission to report that we do have other offers. I won’t specify the number or disclose the details. Worst case, the caller does nothing and we are no worse off. Best case, they bring us an offer that is better than what we already have in hand. Absent a concern about an “appraisal”, before signing the latest offer, to be fair, I ask my seller for permission to let the other agents know that there is competition and ask for their buyer client’s “highest and best” offer. My thinking is that it would only be fair to let everyone now know since the latest offer was prepared with that knowledge. I have heard complaints about agents who were led to believe that a seller was going to sign their offer but changed their mind when a better one came in. We need to be conscious of what we say and do to avoid any misunderstandings. A buyer may be selling their house and have an offer they would sign if they knew they had a house to buy. Imagine signing an offer only to learn that the house you wanted to buy was sold to someone else!

Do I have to go back to those who took the initiative and brought offers in already? I don’t think so. If none of those agents ever asked the question, that is on them. If they did ask, regardless of how I answered, they should not assume or expect me to keep them up-to-date as the situation changes. Again, Real Estate is a moving target. The seller is my client and I work for them.

As I often say, this is NOT a “retail” environment. The asking price is not necessarily the final price and the purchase of Real Estate typically requires several steps allowing either party the opportunity to “change their mind”. It can be like a “roller coaster” and that aspect can wear on the parties or their agents.

This is especially true when the market is not “in balance”, meaning that sellers or buyers have a decided or perceived advantage. Our REALTOR Code of Ethics requires us to be honest, meaning that we cannot lie although our not being permitted to disclose something could adversely affect another agent’s client. I try to be “fair” meaning that I am treating all parties “consistently”. The public, including my fellow agents, deserve nothing less regardless of what they “expect”.

There is NO TIME for inexperience, empty promises OR false expectations!

HIRE WISELY: We are NOT “all the same”!

Buyers, Does It REALLY Matter If a Listing Has Multiple Offers?

That depends. How would that information affect your level of interest?

As long as a property is “still available” to bid on and you know if a contract signing is imminent, you have a decision to make. Even then, there is no guarantee that, regardless of the type of market or the amount of competition, a buyer will have a “second” chance when making an offer to buy Real Estate. If they really like a house they may want to consider making their best offer at the outset. Should a buyer offer “more” if there is real or perceived competition or “less” if there isn’t? Shouldn’t they base their offer on HOW MUCH they like and want to own a house and what they can manage financially?

A market analysis is helpful as is concern about an appraisal if financing is involved but why should a house be “worth more” because someone else may like it? Suppose money is “no object”? Here is the underlying question:  what is the point of making an offer on Real Estate?

I have taught the Accredited Buyer Representative core course and offered my opinion that the point of putting a house “under contract” is simply to lock it up so that the buyer and seller can go through the process of seeing if transferring the deed works for both parties. When a house goes “under contract” before a buyer can make an offer or their offer gets rejected that opportunity does not exist. There may be no “second chance”. First impressions may doom an offer even if there is no competition. Not to minimize the process of buying or selling Real Estate but both parties likely have one or more chances to reconsider their interest in closing a sale. This is not a retail transaction.

Of course, we are dealing with human beings. How they respond to real or perceived “competition” will dictate whether and how they react when they learn about a house they like. If they reach a “meeting of the minds” with a seller will they come to think they paid too much? Home inspections and appraisals can help “correct” that. Do they have remorse, wondering if they bought the best house for their “needs and wants”? I have specific ideas about how to approach “the search” to help ensure that a buyer will have minimal if any “second thoughts” but, in reality, other houses will keep coming on the market. Whether sales contracts fall through or new houses become available, they can tantalize a buyer who is not fully committed to a house they have under contract. I have had buyers want to view a new listing or one that came back on the market while in the inspection contingency phase. I remind them about our search and how they arrived at the decision to make an offer on the house they now have under contract. I also tell them that we have no idea how much other interest the new listing may have, what it will take to get a signed contract, what may have led to its being back on the market or what inspection issues may exist. A “bird in the hand” ….

Is there anything worse for a serious buyer than NOT getting the “best house” under contract? Competition is what it is. Others may be in a better position to buy what you want to own. If you start looking before you are prepared and organized, you may be forced to watch others buy the house you liked and wanted to own. All any buyer can do is “know their limitations” and act accordingly. An experienced, trained and educated professional can help! The Real Estate market is constantly churning and that can frustrate even the most serious buyer.

As far as how to respond to inquiries about “multiple offers”, a listing agent MUST have a conversation with their seller client about how to handle inquiries. We cannot lie and we cannot divulge the answer without our seller client’s permission. We can tell others that we are not authorized to answer the question, which may make others think there is competition. How they handle the situation depends.

I do not like to disclose having other offers in hand but there is a time and place for doing

that. Telling others that there are no offers makes no sense. Whatever others do, throughout any given year, I see MANY listings expire, meaning the listing contract ran out, or get canceled that advertised in the “remarks” section that there was a “multiple offer situation”. The fact that these houses did not go “under contract” and sell can mean that multiple buyers thought them priced too high. Did that disclosure help the seller? Did it deter other serious buyers who may have offered enough to convince a seller to sign a purchase offer?

Frenzied markets typically result in buyers and sellers having regrets, especially if they failed to plan and prepare as well as they might have. Did sellers wait too long to put their houses on the market or to sign an offer, thinking prices would continue to rise? Did they sign one too quickly? Did buyers jump too quickly, perhaps thinking they paid too much? Do they wish they had bought a different house or waited to buy? Did they wait only to find that nothing nicer came on the market? There is no perfect house search!

Some sellers have told me they settled to quickly or waited too long and felt that they had missed a better opportunity. I have read a number of articles about buyers having remorse. Whether they feel that they overpaid or jumped too quickly only to find that a better choice came along is a shame! They may not be able to sell for what they paid or recover their costs. Real Estate is likely our biggest asset requiring our largest investment. Mistakes can be very costly!

There is NO TIME for inexperience, empty promises OR false expectations!

HIRE WISELY: We are NOT “all the same”!

Bright MLS September 2022 Delaware County PA Residential Housing Report

Showing Time, using Bright Multiple Listing Service (MLS) statistics, has released their Local Market Insight report for single-family homes in Delaware County Pennsylvania through September 2022. If you would like information about this or any other County or any specific municipalities in the Delaware Valley, please contact me or visit my website, AndrewWetzel.com. I am only a phone call, an email or a text away! I respond promptly to all inquiries.

We are at the three-quarter point for 2022 and the Real Estate market continues to be affected by recent economic developments which have resulted in a substantial increase in the interest rate and the lingering effects of the pandemic (which contributed to an inventory shortage and then pent-up demand for housing). All of these have added uncertainty to what is generally considered a long-term decision. While many of us contend that our present circumstances should not be confused with the “housing bubble” we experienced some 15 years ago, it is difficult to really assess what is going on as information ebbs and flows. What will sellers and buyers think later when they reflect on these days and how they responded to them?

For example, the pandemic caused many sellers to stay off the market, dramatically reducing inventory levels. While many buyers delayed taking action, the easing of the pandemic contributed to many jumping into the market shifting the “supply and demand” ratios. In many areas, the result was a huge advantage for sellers. Complicating this were several underlying factors.

On the “supply” side, housing starts are down, complicated by supply-chain issues driving up lumber and other costs, a general shortage of existing housing as the number of overall households has been increasing and a significant number of investors are buying in bulk, typically with cash and limited contingencies, solely for the purpose of using them as rentals. Those purchases are estimated to consume about 25% of the inventory. There has also been a drop-off in foreclosures due to a moratorium. That will be changing so do not be surprised by what may look like a sharp increase in foreclosures as there is about a two-year supply to manage.

On the “demand” side, millennial buyers entered the market looking to buy. In addition to the “supply” side issues already mentioned, many of the “bulk” purchases include properties that generally appeal to first-time buyers. The competition for them and other properties has driven up prices and prevented many new buyers from becoming homeowners. As long as rental income remains strong, these investors will continue to acquire properties. The irony is a “catch-22”. First, rental income remains strong meaning high as many are unable to purchase their own homes which creates competition for rentals. Second, the elevated rental pricing is preventing many from saving for the down payment they need to obtain financing. I am not sure there is a way to change this dynamic in the short term.

Interest rates, while still considered historically favorable, have risen rapidly in recent months putting pressure on monthly payments. While interest rates have not historically suppressed pricing, they can influence selling and buying which affects “supply and demand” on local levels. Locally, I am seeing inventory levels increasing, some of which is attributed to sales falling through due to inspection and financing issues. The “auction-type” environment has subsided in many areas resulting in longer times on the market and buyers being better able to work through the buying process.

Many sellers and their listing agents remain overly optimistic as evidenced by a number of dramatic price reductions. Many buyers are refusing to continue the panic-buying hysteria we have been seeing. It appears that, as with the “bubble years”,  many sellers waited too long to try selling although, if they are buying, that may have been in their best interests. From a selling perspective, once again I would remind people not to try to “time the market”. As always, your experience may differ depending on your location and how you have been personally impacted. As I always say, the decision to buy or sell Real Estate is a personal one and the current environment typifies that as many sellers stay off the market or wait for a better offer.

Some buyers are waiting for a “bubble” to burst as interest rates rise. I recently heard a slogan aimed at buyers that makes a lot of sense:  “date the interest rate and marry the house”! That makes sense. You can refinance the interest rate if it drops so what do you do if you find the perfect house for your “needs and wants”? Will something better come along? Alternatively, buying the “wrong “house” will have financial and other consequences. Will interest rates continue to rise while you think there is a better home waiting for you? Maybe; maybe not! As with all serious decisions, having options can present problems! When do you commit?

As always, this report compares current year-to-date results to one year ago during the same time period. As with all Real Estate statistics, two things are true. First, the performance within individual zip codes can and will vary significantly from the overall County. Real Estate is local and results can vary from neighborhood to neighborhood and even block to block. There is no such thing as a “national” Real Estate market any more than there is a national weather forecast so, whether you may be thinking about selling or buying, please contact me for details about your areas of interest. I can provide current information and keep you informed about the evolving market. Deciding whether it is the right time to sell or buy, again a personal decision, typically involves a number of variables, some of which you can control and some of which you cannot. I can provide the knowledge and insight to help you decide what works for you.

My second point is that, unfortunately, all Real Estate statistics involving sold data are stale. This is especially true if you are relying on Internet valuation models which use recorded sales data rather than up-to-date MLS information. Even then, while a sale may be reported as having settled or closed today, the real question is when was the offer negotiated? Typically, financed sales can take 45 to 60 days to close so the market today may be different from when the offer was presented and negotiated. This is especially true as markets change. Up-to-date information, even if not perfect, is important!

As far as the statistics, there were 6414 new “For Sale” listings through September 2022 compared to 7403 through September 2021, a decrease of 13.4%. There were 5496 closed sales through September 2022 compared to 6041 through September 2021, a decrease of 9.0%. The median selling price through September 2022 was $300,000 compared to $270,000 through September 2021, an increase of 11.1%. The decline in the number of newly listed properties impacted the number sold while substantially increasing their selling prices. Real Estate is a “supply and demand” commodity!

The number of currently available properties (667) is above last month (615) and well below one year ago (767). The Days on the Market (DOM) (21) is up from last month (16), the “Sold to List Price” ratio (99.3%) is down slightly while the MSI (Months of Supply) rose above one month (at 1.2 months), about the same as one year ago. Again, these numbers vary throughout the County:  the underlying data shows a wide range of results in all categories among the 49 different municipalities in Delaware County. What happens going forward? Only time will tell.

There is no time for inexperience, empty promises or false expectations! 

HIRE WISELY:  We are not “all the same”!