Consumers who “want to buy” outpace those who “need to buy”

The Pennsylvania Association of Realtors® has been conducting the Welcome Home survey of new homebuyers for more than two years. For the second quarter this year, buyers were categorized into two groups – “want to buy” and “need to buy.”

This distinction has provided some fascinating insight, which we plan to roll out in a series of three videos and social media graphics over the course of several weeks. The first video is below, and others will be available on the PAR Facebook page, so keep your eyes open and share the results!

On average, about 1 in 3 new homeowners are “want to buy” customers, while more than 1 in 4 are “need to buy” customers.

In the second quarter this year, 31 percent of “want to buy” individuals bought their new home because either they are tired of renting, looking for a home in a good school district, buying a second home or just want more living space. A total of 34 percent of buyers fall into the category of “want to buy” over the past year and a half.

Twenty-six percent of buyers pointed to clear and sudden changes in life circumstance as their most important reasons for buying a home. These “need to buy” individuals include buyers who recently got married or divorced, had a death in the family or needed to downsize or needed a house with one floor. A total of 29 percent of those surveyed are in the “need to buy” category since the first quarter of 2016.

As Realtors®, this information is helpful to understand because each buyer’s motivation is different. We may consider creating listing presentations that cater to these two buying categories to help them decide which property best meets their needs.

I found it particularly interesting that while 38 percent of buyers surveyed said they planned to live in their recently purchased home for at least 25 years, a third of “want to buy” clients anticipate spending less than 10 years in their new home.

While the 30-year mortgage and cash are the preferred financing options for both groups, the survey found that consumers who “want to buy” are almost twice as likely to use a financing product such as an FHA loan than “need to buy” consumers.

Consumers who needed to buy were more likely to purchase with cash than consumers who wanted to buy (35 percent vs. 23 percent), but they were about equally likely to say they used a 30-year mortgage to buy their new home (37 percent vs. 40 percent).

The Welcome Home surveys are conducted for PAR by Keystone Analytics® and provide information on consumer homebuying trends.