Posted on: Friday, August 15, 2003

Web opens doors for homebuyers

By Steve Kerch
CBS MarketWatch

CHICAGO — The Internet has become the tool of choice for homebuyers, with nearly three-quarters of buyers logging on to search for houses, new industry figures show.

That's up sharply from the 41 percent of buyers who went online just two years ago when looking for a house, according to the 2003 National Association of Realtors' Profile of Home Buyers and Sellers.

"Almost every home placed on the market today can be found on the Internet, and more buyers than ever are using the Web to search for a home," said NAR President Cathy Whatley.

But the Internet is not putting Realtors out of business, as many had once feared. Instead, technology has driven more business to real estate professionals: nearly 90 percent of those who use the Internet for a home search end up using a real estate broker in their deal compared to 79 percent of those who don't use the Internet.

And although they are using the Web to investigate the market, few Internet users learn about the home they eventually buy that way. Forty-one percent first hear about that house from a real estate agent and 16 percent first learn about it from a yard sign, the NAR survey found; 11 percent found the house themselves online, and 7 percent each from newspapers, homebuilders and friends or relatives.

"What this tells is us that most people use a wide variety of sources in searching for a home, but the single most important resource is a real estate professional," Whatley said.

The typical buyer toured 10 homes over eight weeks before purchasing and moving an average 10 miles from their previous residence; the typical seller placed a home on the market for five weeks and had lived in that home for six years, the NAR profile found.

The survey looked at home buying and selling in the first quarter of this year. Among the other highlights:

• The median home size was 1,830 square feet, ranging from 2,000 square feet for a single-family house to 1,100 square feet for the typical condo in a larger multifamily building.

• The typical seller bought a home that was 18 percent larger, although 29 percent bought smaller homes.

• The typical Internet homebuyer is married and 38 years old with a household income of $70,700. By comparison, the non-Internet buyer is married, 47 years old, with a household income of $56,300.

• Forty percent of all buyers were first-time buyers, down from 42 percent in 2001. The typical first-time buyer is 32 years old, has a household income of $54,800 and makes a down payment of 6 percent on a home costing $136,000.

The typical repeat buyer is 46 years old, with a household income of $74,600, and places a down payment of 23 percent on a home costing $189,000.

Thirty-seven percent of first-time buyers are single, compared to 28 percent of repeat buyers.

• Single women were the second largest segment of homebuyers, accounting for 21 percent of transactions, after married couples, who bought 59 percent of homes. By contrast, single males were 11 percent of buyers, while unmarried couples accounted for 8 percent.

• Three out of four buyers purchased a home through a real estate agent or broker — up from 69 percent in 2001; 14 percent bought from a builder and 9 percent directly from an owner. Of buyers who used an agent, 63 percent chose a buyer representative.

• In the first quarter, 15 percent of homebuyers were either purchasing a second home, owned a second home or were buying a new primary residence and keeping their existing property as a second home. Four percent of all homes purchased were second homes, compared with 5.5 percent of all purchases in 2001.

Typical second-home buyers are 47 years old and have a household income of $85,900; roughly 66 percent are married couples. Fifty-eight percent bought a detached single-family home in the first quarter, but only 21 percent purchased in a resort, recreation or rural area; 66 percent were in an urban or suburban area.

• A trend in recent years showing a decline in for-sale-by-owners transactions has stabilized, with 14 percent of sellers conducting deals without the assistance of a real estate professional. This compares with 13 percent in 2001 and a cyclical high of 18 percent in 1997.