Income Disparity Between New and Existing Home Buyers Widens
New research finds a growing disparity between the median income of all home buyers and the median income of new home buyers. In 2011, home buyers overall had a median income of $64,998. The subset of home buyers that bought new homes had a median income of $81,715, about 26 percent more than the median income of all home buyers. This spread is the largest it has been since before 2001.
The subset of home buyers that bought a home for the first time had a median income of $59,946, about 8 percent less than the median income of all home buyers. The disparity between the income of all home buyers and first-time home buyers is shrinking—this spread is the smallest we have seen since before 2001.
New home buyers are purchasing more expensive and larger homes when compared to all home buyers. The median market value of a new home purchased is $230,000 and the median size is 2,100 square feet. The National Association of Home Builders reports that buyers expect to pay a median of $203,900 and desire a home with a median of 2,226 square feet.
The median value of all homes purchased dropped $35,000 between 2007 and 2009, but only $10,000 between 2009 and 2011. The median value of new homes purchased was stable at $230,000 from 2009-2011. Inthat same three year period 1.6 million fewer households bought a home than between 2007 and 2009 – 8.4 million households bought a home in 2009, compared to 6.4 million in 2011.
Of those that bought a home, only 8 percent bought a new home. This is down from 17 percent of households who bought a new home in 2009. Accordingly, 55% of home buyers, both prospective and recent, would prefer to purchase a new home.