The holiday season is special for many reasons. From a business standpoint, it’s a good time to slow down a bit, reflect upon the year past and contemplate the year ahead. I’m not sure what the history books will say about 2016 — although I have a pretty good hunch the elections might be mentioned — but I think the outstanding performance of Wisconsin’s real estate market ought to receive some well-deserved recognition in that history as well.

Except for tight and shrinking inventories putting upward pressure on prices and the uncertain impact of looming interest rate increases, 2016 continued the brawny post-recession recovery of markets in Wisconsin and markets across the country. 

If past is prologue, one way we can prepare for 2017 is to analyze last year’s buyers and sellers to understand who they were, what they bought and sold, and how they viewed their transactional experience. This is precisely what the “2016 Profile of Home Buyers and Sellers” from the National Association of REALTORS^® (NAR) sets out to do.

For 35 years now, NAR has conducted an annual survey of buyers and sellers across America and compiled the findings in a fascinating report that all REALTORS^® should spend time reading. While the national findings may differ from your local market, knowing these facts will help all of us better understand the macroenvironment of tomorrow’s market. 

First-time homebuyers made up 35 percent of all buyers last year — 3 percent above 2015 but 5 percent below the historic normal of 40 percent. The median income of buyers is up, due in part by increased median prices resulting from tight inventories. Buyers said they spent 10 weeks searching before they found the home they bought. Eighty-eight percent of buyers financed their homes — this included 96 percent of first-timers and 84 percent of repeat buyers. Sixty-one percent said the source of their down payment was savings. Of those who said saving for the down payment was the most difficult aspect of the transaction, 49 percent said it was because of their student loans, 40 percent said it was because of credit card loans, and 34 percent said it was because of car loans. Despite those financing hurdles, 82 percent of buyers saw the purchase of a home as a sound financial investment. The median age of a first-time buyer in 2016 was 32 years old. For repeat buyers, the median age was 52. Most buyers moved about 12 miles. The typical home purchased was 25 years old, 1,900 square feet, with three bedrooms and two bathrooms.

Sellers in 2016 said they had lived in their homes about 10 years, higher than the historic six to seven years. Most sellers had both equity and buyer demand for their homes but experienced difficulty finding an affordable new home. For Sale By Owner (FSBO) sales were just 8 percent of total sales — the lowest levels ever recorded. Typical sellers were 54 years old with incomes of about $101,000. Eighteen percent were selling because their house was too small, 15 percent wanted to be closer to friends and family, and 14 percent had to relocate for work.

Eighty-nine percent of sellers worked with a real estate agent, and recent sellers reported their final selling price was 98 percent of their final listing price. Thirty-six percent said they offered incentives to attract buyers. The median seller sold his home for $43,000 more than he paid for it.

Sellers had a good experience with their agents, with 70 percent saying they would definitely recommend their agents and 15 percent saying they would probably make such a recommendation. In fact, most said they did recommend their agent at least twice, with 33 percent saying they recommended their agents three or more times. Sixty-four percent of sellers said they found their agents through a referral from a friend, neighbor or relative or used the agent they had used before. Seventy-two percent of sellers said they contacted only one agent.

NAR’s report is chock-full of interesting facts and well worth the read. The better we know and understand the buyers and sellers of 2016, the better position we’ll be in to build on our solid housing market in 2017. And if past is prologue, spring is just around the corner!