We all know that real estate is most certainly local, but having an overview of national trends is important to overall market knowledge. The National Association of REALTORS® (NAR) recently released its 2015 Profile of Home Buyers and Sellers which provides the most up-to-date statistics. Although each real estate transaction is completely unique, trends can be useful to gauge market health. 

Demographic figures revealed that first-time home buyers dropped by 1% to 32% of the market, which is the second-lowest figure ever.  The lowest year recorded was 30% in 1987. First-time buyers tend to include more one-income single buyers. When prices begin to rise, oftentimes married couples with dual incomes can better adjust to the higher sales prices demanded. Furthermore, first-time home buyers face obstacles including carrying a large amount of student debt and facing stringent financing guidelines. Both of these factors potentially delay homeownership. The typical buyer overall was reported at 44 years old with a median household income of $86,100.  Broken down further, first-time homeowners were a median of 31 years old with a $69,400 annual income, and repeat buyers were 53 years old with a median income of $98,700. 

Inventory levels are still low across the board. Most buyers that are ready to make a purchase state that the hardest step is definitely finding a suitable home to purchase. New homes made up 16% of home sales with 84% being previously owned homes. The top reason for purchasing a new home was to avoid having to deal with major maintenance issues such as plumbing and heating systems, older appliances, or dated interiors.  Another perk was the capability to have choices on some of the finished items. The rationale for buying an existing home was primarily price related. Detached single-family homes are the type of home most often purchased. 

Sellers are feeling a change in the market because the increase in sales prices means they may have more equity in their homes than they have in the previous few years. The amount of time homeowners have stayed in their homes has increased from six or seven years up to nine years. This is juxtaposed against buyers who state they plan to stay in their recently purchased homes for a median of 14 years. An especially encouraging statistic for sellers is that they were able to sell their homes for a median of $40,000 more than for what they purchased them. 

For-Sale-By-Owner (FSBO) sales are on the downturn, with a record low of 8% reported. Sellers rely on agents to help with appropriate pricing, marketing, and negotiations. Buyers also chose to use a professional to assist with making a smooth transaction. FSBOs sold for a lower median amount than homes that utilized a real estate agent. 

The median sales price for all types of homes nationwide was $220,000 this year. The West weighed in higher at $280,000, and the Midwest was most affordable at $170,000. New homes most often sell for higher median prices than previously owned homes - $277,000 versus $209,000. When we look at our local numbers through the end of October 2015, the median sales price for a single-family home in the Bozeman city limits was $339,450. The surrounding Bozeman area weighed in at $402,500; Belgrade at $235,000; Manhattan/ Three Forks at $229,500; Gallatin Canyon/ Big Sky at $625,000; Park County at $217,000; and Madison Valley at $268,500. 

The number of buyers who own multiple homes was down slightly to 19% compared to 21% last year.  The most common age group for second home buyers was 45 to 64 years old. NAR also released a study earlier this year (April 2015) that highlighted vacation home sales at a record high in 2014 while the purchase of investment homes has been on the decline.  Approximately 1.13 million vacation homes were sold in 2014, which put them at 21% of all residential real estate transactions. The median price of these vacation homes did decline, most likely because larger shares of them were condos, townhomes, or distressed properties. 

And locally, we continue to see low inventory rates across most of our markets with median prices steadily increasing by 8% to 10%. There continues to be strong demand for investment, retirement, and second homes as well as primary residences.