U.S. HOMEOWNERS SURVEYED BY COLDWELL BANKER® ARE BUYING MORE HOUSES THAN THE PREVIOUS GENERATIONS
August 21, 2006
A new study commissioned by Coldwell Banker Real Estate Corporation has found that Americans earning at least $75,000 are buying more houses than their parents at a comparable age, with each generation outpacing the home purchase trends of the previous generation. According to the “Coldwell Banker® 2006 Homeownership in America Study,” 66 percent of survey respondents in the Silent Generation (aged 61 and up) have owned between two and five homes. Already, 66 percent of Baby Boomers (aged 42 to 60), have owned a similar two to five homes. The younger generations surveyed are mimicking these home buying habits. About half (48 percent) of Generation X’ers (aged 32-41), and more than one third (36 percent) of Echo Boomers (aged 31 and younger), have owned between two and five homes. Fifty-eight (58) percent of respondents have owned more homes than their parents did when their parents were at a comparable age.
“These findings suggest that this trend will continue as the younger, upper income generations age,” says Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate Corporation. “Baby Boomers have already equaled the homeownership pace of those 61 and older, and they remain in their prime home buying years. The fact that Generation X and Echo Boomers are indicating that they have owned multiple homes already shows that they understand the value of buying and owning real estate.”
The “Coldwell Banker 2006 Homeownership in America Survey” was conducted online by Harris Interactive® between July 19-31, 2006, surveying more than 2,500 U.S. homeowners aged 25 and over who own a home or a condominium and have a minimum household income of $75,000. The study was conducted in conjunction with the 100th anniversary of the Coldwell Banker brand in August of 2006 to gain a deeper understanding into the behavior patterns of upper income homeowners. This release covers the respondents’ feedback about why and when they move, financial considerations of homeownership and how they expect to live in their later years.
“Interestingly, these homebuyers do not appear to be collecting houses as a means to expand their financial portfolios by constantly moving to bigger and more expensive houses,” Gillespie continues. “Instead, our survey respondents indicate that they move according to lifestyle needs. In fact, only 5 percent of respondents view their current home strictly as part of their financial portfolio, compared to 67 percent of respondents who consider their home a ‘home’ first. When asked if they could sell their current home and get more ‘home for their money’ without affecting their current lifestyle, 53 percent said they would not move or were not sure.”
How and Why People Move
The National Association of REALTORS® has found that people move once every seven years on average. When asked in the “Coldwell Banker® 2006 Homeownership in America Survey” for reasons why they move, 48 percent of respondents indicated they moved because of their career, 45 percent cited a better community lifestyle and 27 percent cited a new relationship / marriage. Of note, women are more apt to move for a relationship than men, at 53 percent as opposed to 37 percent, respectively.
Additional reasons for moving include the need to be closer to family (16 percent), a more affordable location (15 percent), birth or adoption / growing family (15 percent), more affordable housing (13 percent), warmer climate (13 percent), displeasure with the current home (12 percent) and divorce (11 percent). Eighty-three (83) percent of married respondents, or those living with a significant other, waited until solidifying their formal relationships to purchase their first home.
The recent hike in mortgage rates is not playing a significant role in the respondents’ moving process, with 67 percent indicating that the growing rates are not factors in their decision not to move.
The survey also found that a full 81 percent of respondents do not live in the same town in which they were raised, and 52 percent live more than 200 miles away from that town. However, more than half of the respondents (56 percent) still live in the same state in which they were raised.
When asked to define the areas in which they grew up in comparison to the areas to which they moved, two-thirds of respondents moved to a location either equal to or with a higher urban density (57 percent), moving from city to city, suburb to suburb or suburb to city. “Although our respondents are moving further away from their roots to create new lives for themselves, they are not straying too far from the environment they grew up in. Where we live and how we live are critical characteristics that define who we are as individuals,” says Gillespie.
Fixed Up is More Appealing Than a Fixer Upper
In terms of the homes most recently purchased, the results suggest that the “do-it-yourself” trend of the past several years is beginning to cool down, at least among higher-income homeowners. A full 68 percent of respondents indicated that the last home they purchased was a brand new house requiring no additional work, or an existing home needing very little renovation. “Homebuyers may be missing an opportunity to get more house for their dollar by purchasing one that requires some renovation but that can be had at a lower price,” Gillespie says. “Sweat equity can transform a home from a fixer upper into a beautiful living space worth much more than its purchase price.”
A Penny Saved is a Penny Earned
A majority of the respondents indicated that they paid for the down payments on their first homes with personal savings (59 percent), followed by financial assistance from parents (17 percent), then by taking advantage of a “no-money down” mortgage (16 percent). When it came time to purchase a second home, 64 percent of respondents used money from the sale of their previous home for the down payment, with 35 percent using their personal savings for that purpose.
The survey results imply that the respondents feel financially secure relative to the cost of housing. A stunning 81 percent of respondents do not consider themselves “house poor,” with 59 percent of those surveyed indicating that they pay 30 percent or less of their net income towards their monthly mortgages, “What this is telling us is that despite the volume of news stories suggesting that Americans continue to drive themselves deeper into debt, when it comes to real estate, upper-income homeowners are heeding advice and buying houses that enable them to live within their means,” notes Gillespie.
However, while the survey’s respondents display financial savvy in terms of real estate, that fiscal sophistication appears to be more rooted in the present for the younger generations surveyed. Sixty (60) percent of Baby Boomers said they would bequeath their home to their children or another relative. However, only 10 percent of those younger respondents (aged 41 or less) expecting the home said they are factoring those proceeds into their retirement planning.
“The Golden Years”
While marriage or the establishment of a permanent relationship drives entry into homeownership, other life events play a role in the evolution of homeownership. As Americans age, they have more opportunity to own a second home. The study revealed that respondents in the Baby Boomer and older age groups are 70 percent more likely to own a second home or vacation home than the younger generations.
Homebuyers are also taking aging needs into consideration when they think about homes. Nearly one-third (28 percent) of respondents aged 42 and older said they prefer ranch (one story). “This tells us that the older respondents are thinking about the next period in their lives where mobility around the house will be an important issue,” Gillespie notes.
When considering late life living arrangements that may include living alone, 48 percent of respondents aged 61 plus who indicated a preference said that they would rather remain in their current residence. Thirty-four (34) percent would prefer to move into a smaller residence or a condominium on their own.
“Overall, what we learned from the Coldwell Banker® Homeownership in America Study is that while it is interesting and fun to compare homes across the nation and see what you may be able to get for your money somewhere else, the bottom line is that people don’t view their homes as a lottery ticket or cash cow, but as a home,” Gillespie adds. “In fact, 63 percent of our respondents indicate that over the past three years they have not taken equity out of their homes, and 77 percent do not expect to in the coming years. While they may need to pack up and move according to job, relationship or lifestyle needs, at the end of the day, Americans still consider a house a home.”
Methodology
This survey was conducted online within the United States by Harris Interactive on behalf of Coldwell Banker between July 19-31, 2006 among 2,570 homeowners aged 25 and over with an annual household income of $75,000 or more. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.
With a pure probability sample of 2,570, one could say with a 95 percent probability that the overall results have a sampling error of +/- two percentage points. Sampling error for sub-samples would be higher and would vary. However that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.
About Harris Interactive
Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. The company has built what could conceivably be the world’s largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at www.harrisinteractive.com.
About Coldwell Banker®
Since 1906, the Coldwell Banker® organization has been a premier provider of full-service real estate. In 2005, Franchise Times magazine’s prestigious Top 200 issue ranked the Coldwell Banker system number one in real estate and number nine among all franchisors. The Coldwell Banker System has more than 4,000 residential and commercial real estate offices and 127,700 Sales Associates in 30 countries and territories. The Coldwell Banker System is a leader in the industry in residential and commercial real estate, and in niche markets such as resort, new home and luxury properties through its Coldwell Banker Previews International® division. It is a pioneer in consumer services with its Coldwell Banker Concierge® Service Program and award-winning Web site, . Coldwell Banker Mortgage is one of the largest telephone/web based lenders in the country. Coldwell Banker Real Estate Corporation is a subsidiary of Realogy Corporation (NYSE: H), the world’s largest real estate franchisor. Coldwell Banker® is a registered trademark licensed to Coldwell Banker Real Estate Corporation. Each office is independently owned and operated except for offices owned and operated by NRT Incorporated.