More than half of home buyers in the 2009 Profile of Illinois Home Buyers and Sellers were first-time buyers, due in large part to the first-time homebuyer tax credit stimulus and increased affordability in home prices in the last year. The survey results released by the Illinois Association of REALTORS® (IAR) found 51% of buyers were first-time buyers, compared to 47% nationwide (a figure which has averaged closer to 40% nationwide since 2001). When asked about the primary reason for timing of the home purchase, 46% of first-time buyers said it was just the right time.
“2009 has been a strong buyer’s market and in particular for the first-time buyer who was able to take advantage of the low interest rates and more affordable home prices and large supply of homes on the market,” said Mike Onorato, GRI, president of the Illinois Association of REALTORS®. “We should see this trend continue early in 2010 as the $8,000 first-time buyer tax credit has been extended through April 30 and expanded to include a tax credit for long-time homeowners of up to $6,500.”
The median age of first-time home buyers in Illinois was 29 years old, while the typical repeat buyer was 45 years old. The median income was $64,400 among first-time buyers and $92,800 among repeat buyers. Forty-seven percent (47%) of first-time buyers used Federal Housing Administration (FHA) financing compared to 38% who used a conventional loan to finance their home purchase. Out of all buyers, 33% used FHA and 55% obtained a conventional loan.
According to the Illinois report, 75% of first-time buyers were previous renters of an apartment or a house while 25% of first-time buyers were single females, and 13% single males.
New home purchases were at the lowest level in eight years nationwide—down to 18 percent of all recent home purchases. This is reflective in Illinois—14 percent of homes were new. Sixty-seven percent (67%) of all home buyers purchased a detached single-family home, 22% an apartment/condo and 8% a townhouse. In Illinois’ more urban/central city regions, 49% of homes sold fit the apartment/condo categories.
In the Illinois survey when considering the purchase of a home, commuting costs were considered very or somewhat important by 79 percent of buyers. Other factors influencing home choice were quality of the neighborhood (67%), convenient to job (55%), overall affordability of homes (40%) and convenient to friends and family (39%).
“More consumers are using the Internet to research homes but most continue to rely on the expertise of a real estate professional to guide them through the real estate transaction,” said Onorato, broker-owner of Onorato Real Estate in Coal City. “Illinois buyers say the top three ways real estate agents help them include understanding the complex process of buying real estate followed by pointing out unnoticed features in the property and negotiating the terms of the contract.”
The Illinois report found 89% of buyers in Illinois used a real estate agent as their information source in the home search with nine in 10 home buyers also using the Internet to search for homes.
Ninety-six percent (96%) of home buyers financed their recent home purchase. The typical buyer financed 89% of their home purchase. Nearly half (49%) of home buyers reported they have made some sacrifices such as reducing spending on luxury items, entertainment or clothing.
Eighty-four percent (84%) of Illinois sellers were assisted by a real estate agent when selling their home. Recent sellers typically sold their homes for 95% of the listing price, and 58% reported they reduced the asking price at least once. Forty-five percent (45%) of sellers offered incentives to attract buyers, most often assistance with home warranty policies and closing costs.
The typical Illinois home seller owned their home for seven years and said the primary reason for selling the previous home was the size of the home was too small (22%) or job relocation (20%).
“2009 will definitely go down in history as the year of the buyer,” said Onorato. “As inventories shrink as we’ve seen occur in recent months, home prices will begin to stabilize and we will return to a more balanced housing market between buyers and sellers.”
Information in the survey was obtained by the National Association of REALTORS® in a survey mailed to a sample of consumers who purchased homes between July 2008 and June 2009.
For more information, visit www.illinoisrealtor.org.
Mary Schaefer/Ann Londrigan