Cincinnati Home Buyers and Home Sellers Survey

2009 Profile of Home Buyers and Sellers
Cincinnati, OH Report
Prepared for:
Ohio Association of REALTORS
Prepared by:
NATIONAL ASSOCIATION OF REALTORS
Research Division
November 2009
2009 Profile of Home Buyers and Sellers 1
NATIONAL ASSOCIATION OF REALTORS
2009 Profile of Home Buyers and Sellers
Cincinnati, OH Report
Report Prepared by:
Paul C. Bishop, Ph.D.
Jessica Lautz

2009 Profile of Home Buyers and Sellers 2
NATIONAL ASSOCIATION OF REALTORS
2009 Profile of Home Buyers and Sellers
Cincinnati, OH Report

Introduction
Buying or selling a home is a complex and, at times, daunting process. There are many options as well as constraints that households face when searching for the right home that will meet their needs today as well as in the future. For home sellers, the transition from one home to another often is driven by significant life events such as a job relocation or retirement. Recently, the unsettled economy has added another layer of uncertainty as both would-be buyers and sellers consider when, and even if, they should complete a real estate transaction.
A majority of home buyers and sellers rely on the services and expertise of real estate professionals to assist them with their transaction. In turbulent times, buyers and sellers appreciate the knowledge and expertise of real estate professionals who can guide them through each step of the transaction. One indicator of client satisfaction is that a majority of both buyers and sellers report that they would use the same real estate agent again or recommend that agent to others.
The NATIONAL ASSOCIATION OF REALTORS surveys home buyers and sellers annually to gather detailed information about the home buying and selling process. These surveys provide information on demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also share information on the role that real estate professionals play in home sales transactions.
This report provides real estate professionals with insights into the needs and expectations of their clients.

THE NATIONAL HOUSING ENVIRONMENT
Although evidence is accumulating that the economy is emerging from the Great Recession, there are a number of headwinds that may make the nascent recovery slower and more tentative than previous business cycle expansions. Significant job loss is one of the most tangible effects of the recession. Most sectors, with the possible exception of healthcare, have recorded significant decreases in employment. Even under the most optimistic expectations, it will take several years to reabsorb the unemployed and reduce the unemployment rate toward a level consistent with full employment.
The second long-lasting characteristic of the recession is the loss of trillions of dollars of household wealth since 2005. Households experienced falling home equity and sharply reduced financial asset values as stock markets worldwide posted some of the steepest declines in memory. For many households, the equity held in their home is the largest component of their wealth. Recently released data from the Federal Reserve shows that homeowners equity holding relative to the value of their homes is near all-time lows. Downward pressure on home prices as well as extraction of equity through second mortgages and lines of credit has reduced the equity stake that households in the aggregate have in their homes. Unlike job loss, which directly affects a fraction of all households, the loss of wealth is broadly felt.

Evidence is emerging that households are working to strengthen their balance sheets by paying down debt and saving a greater portion of their paycheck. The national savings rate has increased from virtually zero to the high single-digits. Some experts speculate that the long-term impact will be slower growth as cautious consumers spend more carefully and rely less on credit.
It is within this environment that tentative signs of stabilization are emerging in the housing market. In most areas of the country, home prices remain well below peak levels recorded in late 2005 and early 2006. However, unit sales have risen in some of the areas that have experienced the steepest decline in prices. Inventories of homes for sale have been pared to manageable levels. Housing affordability is at record levels, which has drawn cautious home buyers and investors into the market. Also contributing to the increase in home sales has been a tax credit available to first-time buyers. In fact, as detailed in this Profile, the share of first-time home buyers, typically around 40 percent of sales, rose to 47 percent during the period from mid-2008 through mid-2009.
Challenges remain, however. Consumers remain understandably cautious about the economy and their personal financial situation. While mortgage rates remain at very favorable levels, some home buyers find that securing a mortgage is both more time consuming and more difficult. In fact, one in ten recent home buyers reported that obtaining a mortgage was more difficult than expected.
Perhaps as important for the long-term resilience of the housing market, home ownership is still a goal that many aspire to achieve. For example, 62 percent of first-time buyers reported that the primary reason that they purchased a home was the desire to be a homeowner. Other benefits of ownership, while important, ranked lower for most first-time buyers. The dream of homeownership remains alive and well.

NOTES
In July 2009, the NATIONAL ASSOCIATION OF REALTORS mailed an eight-page questionnaire to 120,038 consumers who purchased a home between July 2008 and June 2009. The survey yielded 9,138 usable responses with a response rate, after adjusting for undeliverable addresses, of 7.9 percent. There were 285 unweighted responses from Cincinnati, OH, yielding a response rate of 8.1 percent, which form the basis for this report. Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records. Information about sellers comes from those buyers who also sold a home.

2009 Profile of Home Buyers and Sellers
Cincinnati, OH Report

Characteristics of Home Buyers
Forty percent of recent home buyers were first-time buyers, compared to 47 percent nationwide. The typical first-time home buyer was 27 years old, while the typical repeat buyer was 49 years old, nationwide first-time buyers were typically 30 and repeat buyers were typically 48 years old. The 2008 median household income of buyers was $68,500; this is slightly lower than the median income of buyers nationwide which was $73,100. The median income was $55,000 among first-time buyers and $79,700 among repeat buyers. Twenty percent of recent home buyers were single females, and 10 percent were single males. Nationwide, twenty-one percent of recent home buyers were single females, and 10 percent were single males. For 32 percent of recent home buyers, the primary reason for the recent home purchase was a desire to own a home.
Characteristics of Homes Purchased
New home purchases were at the lowest level in eight years nationwidedown to 18 percent of all recent home purchases. This is reflective in Cincinnati, OH15 percent of homes were new. The typical home purchased was 1,900 square feet in size and was built in 1987. Ninety-one percent of home buyers purchased a detached single-family home. The median price of home purchased was $160,000 compared to $185,000 nationwide. When considering the purchase of a home, commuting costs were considered very or somewhat important by 75 percent of buyers.

The Home Search Process
For more than one-third of home buyers, the first step in the home-buying process was looking online for properties. Ninety-one percent of home buyers used the Internet to search for homes.

Real estate agents were viewed as a very useful information source by 80 percent of buyers who used an agent while searching for a home. The typical home buyer searched for 12 weeks and viewed 10 homes. This compares to 12 weeks and 12 homes viewed by the typical buyer nationwide.
Home Buying and Real Estate Professionals
Seventy-six percent of buyers purchased their home through a real estate agent or broker. Eleven percent of buyers purchased a home in foreclosure. Nationally, 10 percent of buyers also purchased a home in foreclosure. Forty-nine percent of buyers found their agent through a referral from a friend or family member. Sixty-seven percent of buyers would definitely use their real estate again or recommend the same agent to others.

Financing the Home Purchase
Ninety percent of home buyers financed their recent home purchase. This is slightly lower than buyers nationwide92 percent financed their recent home purchase. The typical buyer who financed their home financed 91 percent of their purchase. 27 percent of home buyers reported they have made some sacrifices such as reducing spending on luxury items, entertainment or clothing. Nearly a quarter (23 percent) of first-time buyers reported their mortgage application and approval process was somewhat more difficult than they expected, and 13 percent reported it was much more difficult than expected.
Home Sellers and Their Selling Experience
Ninety-four percent of sellers were assisted by a real estate agent when selling their home. Nationwide, 85 percent of sellers used a real estate agent when selling their home. Recent sellers typically sold their homes for 94 percent of the listing price, and 68 percent reported they reduced the asking price at least once. Among all sellers nationally, sellers typically sold their homes for 95 percent of the listing price, and 60 percent reported they reduced the asking price at least once. Fifty-one percent of sellers offered incentives to attract buyers, most often assistance with home warranty policies and closing costs.

Conclusion
Home buying and selling remains an important segment of the national and local economies, especially due to the housing sectors unique power to revitalize the economy during challenging times. With historically low mortgage rates, buyers and sellers continue to have opportunities to trade up, trade down, relocate or purchase a second home. First-time buyers are now 47 percent of the market, are discovering and capturing the benefits of homeownership, which contributes to significant wealth accumulation, among other financial, social, and personal rewards.
Consumers rely on the experience and expertise of real estate professionals to assist when buying and selling a home. Working in an extremely competitive environment, agents and brokers provide high levels of service to meet the varied needs of home buyers and sellers. The value that consumers place on the services offered by real estate professionals is reflected in the large majority of both buyers and sellers who would use their agents again or recommend them to others.

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