The Latest Trends and Statistics in the Housing Market (2021)
The housing market has significant importance for the broader economy, accounting for 17.5% of the U.S. GDP in 2020. 4.2% of the GDP impact is the spending on construction. The other 13.3% includes other spendings on homes such as rent, utilities, and the home buying process, totaling $2.8 trillion. This indicates the real estate industry trends can be indicators of the overall health of the economy.
- The total housing market value reached $36 trillion.
- There were a whopping 6.69 million homes sold up until July 2021
- By July 2021, the total median home price reached $390,500
- The number of Realtors has increased from 1,11 million in 2009 to 1.53 million in 2021, reaching an all-time high.
- Realtors earn an average of $8,500-75,000 depending on the experience.
- A typical real estate agent is a white woman who is 54 years old and has some post-secondary education.
- Gen Xers make up the largest percentage of homeowners at 24%
- The main reasons for buying a home in 2021 are the desire to own a home, a larger home and to be closer to family and friends.
- June and July are the best months to buy a house.
The US Housing Market
A bright spot in an otherwise gloomy 2020 was the real estate market. Following a brief period of retrenchment at the start of the epidemic, home sales skyrocketed. Prices increased due to a dearth of available houses on the market and low mortgage rates. Rising prices increased property values, resulting in more wealth for home sellers.
However, 2021 will not be such a steady rush and this may be excellent news for purchasers. Because of the pandemic, traditional homebuying seasons were canceled in 2020, resulting in a free for all. However, with things returning to a new normal in 2021, expect homebuying seasons to return, with a spike of buyers in the spring and summer months and a slowdown in the winter.
The Value of the Housing Market
COVID-19 left Americans trapped in their homes and millions of others out of jobs. Yet, amid the pandemic and recession, the housing market flourished.
- In 2020, the total housing market value reached $36 trillion, increasing $2.5 trillion within the year, the biggest jump year-on-year since 2005.
- The booming market started in July 2020, when the total number of homes sold reached 6.8 million, increasing 1.2 million from June 2020.
By July 2021, the total number of homes sold was at a seasonally adjusted rate of 6.69 million, with 5.99 million of them being existing houses.
The first part of 2021 constituted an 18% increase from the previous year, with $41.3 million spent on home sales. While Americans are buying relatively the same amount of newly constructed houses as in 2020, there was a $6.8 million increase in existing home spending.
Prices for both existing and newly constructed homes experienced an upward trend in the last decade. In 2020, the price for existing homes peaked at $296,700, a $24,800 increase from the previous year. At the same time, the price of newly constructed homes increased by $11,600, reaching $333,100 by the end of the year.
Starting from January 2021, the median home price surged, except for a slight decrease in March 2021. By July 2021, the total median home price reached $390,500.
The record-low mortgage rates come as a result of the Federal Reserve lowering rates in response to COVID-19.
However, the July 2021 Federal Reserve meeting minutes released show that they plan to taper their bond-buying program. Though the market did not respond to the news, the moment the Fed starts applying changes to their bond-buying program, the mortgage rates will surge.
The data from the U.S. Census Bureau shows there were 1,391,000 newly constructed houses in July 2021. This is a slight increase of 51,000 housing units from last year’s same period.
The small change in the market supply with houses indicates that the buyers will continue to fight for homes that will keep the price high for some time.
Real Estate Agent Statistics 2021
Nowadays, Tech has enabled homebuyers to do most of the legwork themselves when it comes to discovering listings. However, that first search is only a small fraction of the total house purchasing process.
While finding your ideal home all by yourself might save you the hefty commission rates that many real estate agents charge, for many, going Han Solo may not be the best option, and may end up costing more than a realtor’s commission in the long run. In these situations, it really pays to have a helping hand from a specialist.
General Real Estate Agent Statistics
In fact, the number of active agents and NAR members has increased from 1,11 million in 2009 to 1.53 million in 2021, reaching an all-time high.
This trend reflects the recovery of the real estate market following the 2007-2009 financial crisis, as residential home sales started to increase from 2011 onwards.
This growth in real estate agents and home sales also correlates with the low mortgage rates which hit another all-time low of 2.87 in the last 50 years. These low rates make credit cheap and amply available, fueling more bidding wars and encouraging an already fiery housing market.
A person cannot use the title “Realtor” unless they are a member of the National Association of Realtors, pays an annual due of $150 a year and complies with NAR Code of Ethics and Standards of Practice.
It is estimated that there are more than 3 million active real estate agents in the US but only 1,534,008 (NAR) are Realtors.
This means that real estate agents and Realtors are not one and the same. Although we use the terms “real estate agent” and “Realtor” interchangeably in common language, real estate agents are not necessarily Realtors.
Real estate professionals helped 88% of sellers during the sale
Buying a house through a real estate agent is a regular real estate trend that has persisted for years.
In 2021, 88% of buyers acquired their property through a real estate agent or broker, 5% directly from a builder or builder’s agent, and 5% from the previous owner.
90% of homebuyers would recommend their real estate agent to others
Homebuyers are generally pleased with their real estate agents’ knowledge of the buying process and responsiveness. NAR reports that 90% of buyers would at the very least recommend their agent to others.
Buyers have generally recommended their agent at least once since buying their house.
41% of homebuyers found their real estate agent through referrals
NAR reports that real estate professionals earn their income mostly through referrals.
41% of homebuyers consult with a realtor referred to them by a relative, neighbor or friend.
This means that the main source of income for real estate agents is through referrals.
Finding a trustworthy and honest agent was the most essential factor for homebuyers, according to 98% of respondents.
Other essential qualities to consider while selecting an agent were knowledge of the purchase process and agent’s responsiveness at 94%.
Homebuyers also valued communication and negotiation skills at 89% and 82%, respectively, and deemed skills with technology to be critical for their agents at 45%.
Real Estate Agent Income
On average, real estate sales agents bring in $43,000 a year, a decrease from $49,700 in 2019. However, the first years are the most difficult for real estate agents in terms of gross income and expenses. Realtors with 2 years or less experience earned an average of $8,500 annually compared to Realtors with 16 years or more experience who had a median gross income of $75,000.
No prizes for guessing that New York, with its extremely expensive real estate in its suburbs and Long Island has the highest average annual salary for real estate agents at $102,200.
The top-5 states for real estate agent salaries are largely located in the Northeast and the West, encompassing both the Pacific Coast and the mountain states of Colorado and Utah.
In general, 55% of real estate agents are paid by the seller, while just 21% are compensated by the buyer only. When the buyer reimbursed the agent, it was usually a percentage of the sales price rather than a flat charge.
Real Estate Agent Demographics
The real estate sector is undeniably competitive. Although a college degree is not a prerequisite to enter the industry, it appears that some demographics of Realtors are typically given more representation than others.
Even though we have come a long way as a society, there’s still a lot to do since discrepancies in the real estate market among different ethnic groups, genders and socio-economic backgrounds are still too large to ignore. Let’s take a closer look at the demographics of the NAR membership this year:
Real Estate Technology Statistics
Technology is continuing to change the way real estate agents do business and interact with clients. While older technologies such as e-mail, social media, and GPS are widely used on a daily basis, there are also new developing technologies such as Photofy and the usage of drones.
Agents may go “all-mobile,” avoiding the conventional office atmosphere and using drones to take pictures of a property, and even use virtual home tours to present a home to a customer on the other side of the world.
Homebuying Statistics 2021
As we zoom in on the housing market, we found that the typical homebuyer is a white, married, 48 years old, with a median income of $113,300. While the average American home buyers had similar behaviors and purchasing motives over the years, we witness differences among generations.
Millennials continue to be the biggest homebuyers group, with most of the younger millennials being first-time buyers. They are also the group that relies most heavily on mortgages to finance their home.
A top favorite of all homeowners continues to be a detached single-family home in the suburban area. Homebuyers usually start their buying process during the spring and summer months, visiting ten houses before purchasing the one they liked.
This makes Gen Xers the largest age group of homeowners. They are followed by older millennials (31 – 40 years), that make up 23% of the homebuyers.
These two groups have been the largest age group of homebuyers in the last five years. However, we see a decrease in these two groups as younger millennials (22 – 30 years) come to the workforce, start families, and buy homes.
In 2017, only 6% of homebuyers were younger millennials. The number more than doubled to 14% in 2021.
While White/Caucasians comprise 83% of homebuyers, we see an increase of African-Americans and Latino homebuyers at younger ages. In 2021, 6% of homebuyers age 32 – 41 were African-American, 4.1% more than African-American homebuyers older than 76 years.
Homebuyers Marital Status
Throughout the years, we see that married couples are the ones buying most homes, actually, 6 out of 10 homeowners are married couples. It is logical because when couples get married they want to start a new life together to create a family which involves having a home.
However, out of single people, women own more houses. In 2021, single women comprised 18% of total homeowners compared to 9% of single men homeowners.
Homebuyers Yearly Income
Over the past five years, we see an increase in homebuyer’s medium income, jumping by $8,000 in the last five years. Just this last year, it increased by $3,300.
In the last 8 years, Gen Xers, continue to be the top earners with a yearly income of $113,300 in 2021
For most Americans, buying a home is their biggest life investment. Close to a third of them said the desire to own a home was the main purchasing drive.
The typical buyer buys a previously owned home in a suburban area, a behavior mostly prevalent in younger generations. The behavior is plausible as older generations prefer to live in community-based homes.
Americans usually purchase their homes in the spring and summer months, hoping to settle in before the new school year starts.
The desire to own a home is more prevalent in younger generations, with 1 in 2 homebuyers of 22 – 31 years old saying this was the main drive to purchase a home.
In contrast, older generations buy their houses mainly because they want to be closer to their families or own a small home. As retirement approaches and children move out of the house, it is convenient for the elderly to downsize their homes.
For the last five years, 85% of homes bought were previously owned houses. The number comes as no surprise since the new homes built every year have kept relatively low. However, homebuyers have different reasons for buying a previously owned home compared to a new one.
In 2021, avoiding renovations was the main reason why Americans invested in a new house. Close to a third of new homes buyers said they purchased because they appreciated the ability to choose and customize design features. It means the higher price will save them in the long run by allowing them to spend less money on problems with plumbing or electricity.
35% of previously owned homebuyers said the better overall value was the primary reason for purchasing their home. Existing homes come in the market cheaper than a new home, which is an advantage for people looking for a house at a reasonable price.
1 out of 2 homebuyers bought a house in the suburban area.
Over the years we see a slight decline in homes bought in the suburban area, even though it continues to be a favorite location for Americans.
1 in 5 homebuyers bought a small townhome
In the past two years, row houses are becoming more popular. While in 2021, 22% of home buyers purchased a small townhouse, only 18% of them did the same in 2014.
A house stays in the market for 69 days during summer. On the other hand, winter months are considered the slowest with homes typically staying in the market for 92 days.
Winter also falls behind with the number of closed sales, with 505,135 fewer home sales compared to the summer months of the same year.
Homebuyers usually view 5 to 6 houses online and visit 8 to 10 places before purchasing the one they like during the search time.
In contrast, only 18% of them contact a real estate agent.
However, 33% of 23 – 31-year-old homebuyers said their first step was learning about the homebuying process.
Over the years we see that more and more people are using the internet to find their homes, a 9% jump from 2013.
At the same time, 28% of homebuyers found their home through real estate agents, a decrease of 6% from 2013.
Key Takeaways: The Future of Housing Market
The housing market boom came due to a disproportion of supply and demand in the market, contributing to a jump in home prices. At the same time, shrinking mortgage interest rates lured buyers into purchasing a house.
The pressing question for every home buyer and seller in the current hot market is the market going to crash in 2022?
According to experts, a crash may be a big word, however, they expect the market to flatten out.
First, experts predict that the construction of new houses will increase to 1.68 million units in 2022 from 1.38 million in 2020. With more homes in the market, the price may flatten as there will be less strife among the buyers.
Second, experts predict mortgage rates will rise to a full percentage during 2022. The low mortgage rates came as a result of actions taken by the Federal Reserve. However, as the market stabilizes, the Fed may change its strategy.
For the American homebuyer, this means that in the future, there will be an increase in mortgage rates. However, so will the supply of houses, which most likely will contribute to lower home prices.