In the 50th episode of The Solution, Jeff and Phil talk with Jessica Luatz. Jessica is the Director of Demographics and Behavioral Insights at the National Association of Realtors. Listen and read along as Jessica shares her perspective of what home buyers and sellers are interested in.
Phil: Welcome everybody to The Solution. A real estate podcast where we talk about putting the consumer first. It is time. We’ve got to change the swell around the country. My co-host Jeff Sibbach.
Phil: In the mix. Phil Sexton. We’re on Episode Number 50. 5-0. The big 5-0. It’s almost like we need to have an over the hill birthday party celebration. Maybe we’ll do that for 75. We’ll do that in a couple of weeks. Today we are very excited because we’ve got a guest that’s next level Sibbach.
Jeff: I am just floored that she decided to join us. How are we so . . . Well, I don’t know. I think just because we asked or maybe because Doctor Lawrence put in a good word for us.
Phil: Oh, well, I think that’s-
Jeff: Whatever it was, good job for however we made this happen-
Phil: Let’s bring on Jessica. Everybody, let’s help welcome her to the podcast. Woo! Jessica Lautz, thanks for being here.
Jessica: Thank you. I’m psyched. This is awesome.
Phil: I’ve got a couple of data points that I’d like to share with the listeners, just so they understand-
Jeff: How big of a deal you are.
Phil: … the caliber of guests that we’re able to get on the show to talk to us about the consumer trends in today’s markets. You are the Director of Demographics and Behavioral Insights at the National Association of Realtors.
Phil: Did you start at this position?
Jessica: I did not, no. I moved around a little bit in the research group, so I’ve been able to grow a little.
Phil: You started at NAR in 2007.
Phil: Since worked your way into this position. That’s like a big long title that I actually don’t know what that entails. Except what I do know is that you publish and you write the annual studies that NAR produces, such as the member profile. The one that we’re excited to talk about today is the profile of home buyers and sellers. You also do the commercial member profile.
Phil: I don’t know if you know this, Jeff, but we’re talking to a future doctor.
Phil: She is in school currently to get her Doctorate of Real Estate from Nottingham Trent University. And her thesis is, Is The Dream Still Alive?
Phil: Tracking Home Ownership Amid Changing Economic and Demographic Conditions.
Phil: Let’s at least give her a round of applause, good job, thank you for coming aboard.
Jessica: Thank you, thank you.
Jeff: I don’t know if you know this about me, but I really love real estate.
Phil: You should come on this podcast.
Jeff: I really love real estate a lot. So I have a few, even though we didn’t prep you with these questions just because-
Phil: You’re going off the cuff?
Jeff: No, well, I mean-
Phil: You can say that.
Jeff: I’m a huge fan of the report. I pay attention to several trends that have come out of that report, in deciding for us to shift our business, as we have moved more towards, in the new world of selling real estate, where consumers have so much more information, and how that’s changing their buying behavior. I use a stat, and I want to know if it’s true or not. Sorry, I’m going to go to a specific stat, but you helped put that together.
Phil: Jessica, I’m going to help actually get you some talking time today. I want to promise that.
Jessica: No, this is great.
Jeff: Yeah, I’m just so excited, I’m bursting from the seams. I use a stat that says that 70% of consumers drive by a house. Is that a stat that you’re familiar with?
Jessica: Yeah, so those who are searching online are absolutely looking in the neighborhoods, they’re asking agents for more information, for what they’re searching for online. Nearly every type of buyer today, regardless of their age, starts their process online. They’re looking for homes, they’re looking for things completely out of their price range, just looking at beautiful homes and their photos. But also our first-time home buyers are looking for information about the home buying process, too.
Jessica: So it’s the whole gamut of what you’re doing online, whether it’s in Starbucks or whether you’re showing Mom and Dad what you can’t afford. But everyone’s looking online. And then they get off of line, and they get in their car, and they drive around, or they walk around their neighborhood, and see what they can actually afford.
Jeff: Is the number as high as 70%?
Jessica: Off the top of my head. Thanks for pulling one number I don’t know.
Jeff: OK, good deal.
Phil: Of course he did. He just asks the tough questions. You know what, Jessica, you know your answer is, when you don’t know the number, you just say you know what, Jeff, you’re going to have to read the report.
Jessica: You have to open the 150 pages and read it.
Jeff: Yeah. It was just that, what we see a lot … I mean, we see it to be true so much where now that agents have a challenge, because they used to have to come to us. I just wanted to see how much you see that in your report as well. I feel like the consumer’s driving the bus now.
Jessica: The big thing though, is that buyers don’t know all the information. Especially repeat buyers are coming back to the market, after nine years, after living in their home. This is a brand new process, this is not the same experience. So first time home buyers are brand new to the process, they don’t know anything, they’re going to rely on their agent to actually tell them about the buying process. But your repeat buyers on the market, they really are brand new. They don’t remember everything they went through, and the buying process today is completely different than nine years ago.
Jeff: Right. Wow.
Phil: I told her as we were prep talking about this episode today, I said that we just recently came from the Zillow Premier Agent Forum, which was a conference that Zillow held in Las Vegas this past weekend. And Zillow, well, and ironically, Jessica you are in Boston currently in your hotel room, because the NAR conference is starting officially tomorrow.
Phil: Six presentations that you’re doing on this data for the guests, the conference attendees. So thank you for taking your time-
Jeff: Maybe we should just ask her what she thinks she should share with us to help educate us.
Phil: But I’m curious, Zillow publishes a report on consumer trends as well.
Jeff: Oh, yeah.
Phil: And they have 150 pages of charts and graphs, and I feel like NAR has something that’s very similar. So I’m just curious, do you look at each other’s? What’s the difference between the two reports?
Jessica: I don’t think there’s any good researcher out there that doesn’t look at all the research. You have to look at everything that’s in the market.
Jeff: But you don’t-
Jessica: So we definitely take a look at it. Hmm?
Jeff: You don’t sleep, Jessica?
Jessica: It’s amazing. Doing a doctorate and working full-time means I really don’t sleep a lot.
Phil: I was going to say, how do you have all the time? Go ahead.
Jessica: You have caffeine. I will say, the report that we’ve been doing, I’m very lucky to be working on this for more than a decade. But this report that we have at NAR, it’s actually the longest-running demographics study in the U.S. of home buyers. It actually goes back to 1981, the same year Beyonce was born, also myself, so pretty important year. I mean, come on, that’s a really important year out there.
Phil: That’s something about you that is similar to Beyonce.
Jessica: Yeah, I know. Me, Beyonce, Paris Hilton I’m pretty sure, all born the same year. And I share a birthday with Harry Potter. It’s a really, really important birthday. Now you guys will always know my birthday.
Jessica: It is the longest-running demographic study, though. And we’ve changed our methodology in recent years, we actually do it paper and online. We do it English, we do it in Spanish, because we know that there’s a growing Spanish-speaking population in the U.S., so we’re trying to make sure that we reach everyone who is a recent home buyer, who will fill out the survey. We have a huge response to this survey, so we actually have this year over 7,000 responses. In comparison, another survey out there that I’ve heard of, that you mentioned, has 3,000 responses of recent home buyers. So a little bit different sample size.
Phil: Wow, all right, so let me see here.
Jeff: So do you.
Phil: They’ve got 7,000 responses.
Jeff: I heard that.
Phil: And the other one had 3,000.
Jeff: Yeah, she said we’re more than twice as better than them.
Phil: More complete.
Jeff: She was so polite. She was polite about it. Maybe, I don’t know that I’m as polite as she is. How much have you changed the questions that you ask?
Jeff: Are you seeing, we’re seeing a massive shift, but is it changing? Only because now you talk about doing this for ten years.
Phil: Since 1981.
Jeff: Yeah, but she’s been doing it for ten years. From the time that you started?
Jessica: Yeah. Every year, we revisit the survey. We try and make sure every year that we revisit the survey, that we ask the right questions for today’s home buyers. In the last five years, one of the new ones is, do you have student loan debt as a home buyer? And we’re actually asking about the debt load of different types of debt. So student loan debt is number one, credit card debt, auto loans, how is that impacting you getting into the home buying market?
Jessica: And we try and revisit these every year, so we added on healthcare costs, of course, childcare costs, growing issue in the U.S. We’re trying to make sure that we are in touch with today’s home buyers, but also making sure that we’re in touch with the challenges that they face getting into the market. We do another survey on a monthly basis, and we actually ask all U.S. households. So renters, non-owners, those who are living with Mom and Dad.
Jessica: It’s a phone survey. And we also ask homeowners, and we ask them different questions every single month, because we want to make sure we’re keeping a pulse on what the struggles are. Is home ownership valuable? Do you feel it’s part of the American Dream? Those things don’t change. But things that we do see changes on are what the biggest struggles getting into home ownership are, and how they feel home ownership is changing for them. That’s a really interesting one where we can pivot really quickly.
Phil: Yeah, so.
Jeff: I have so many questions. I just want to ask.
Phil: I want to ask her about what she just said. What is it, when people are coming back, what changed, how do they look at home ownership now and how did that compare with yesterday?
Jessica: What we see, as far as the American Dream, and you want to own a home in the future. Those two numbers are the most flat and the most boring numbers I would say that we have in the data world. Because people do want home ownership, they do feel it’s part of their American Dream. But the reasons why they can’t get there today are different than they have been historically. The reasons why are rising rental costs. Their wages are not keeping pace. You see student loan debt come number two, as an issue.
Jessica: You see who’s entering the home buying market shift as well. So the home buyers today who are first time home buyers, they’re wealthier. They have higher household incomes. They are more likely to have parental help. So we started changing up those questions too. How do you have parental help? Is it just down payments, or are you moving from your parents’ home without paying rent into home ownership, as a way to really enter the home buying market, and we’re seeing that shift as well.
Jeff: The number that I thought I saw lost was 64.5 or 64.4 percent were the amount of people that owned a home … Why are you laughing?
Jessica: I’m laughing because you’re so precise. That’s amazing.
Phil: But is it accurate?
Jessica: The home ownership rate in the U.S., yes, we’re looking in the mid to low 60s, depending on what quarter you’re looking at. It’s not the peak. Hmm?
Phil: I’m just teasing.
Jessica: The peak was at 69%. We’re nowhere near that 69%. In recent quarters we have been ticking up. Hm?
Jeff: What year was that?
Jessica: Oh my goodness, this is worse than my dissertation defense.
Jeff: You don’t have to … If you’re not sure, that’s fine.
Phil: Read the report, Jeff.
Jeff: I just want to know, in general, was it back in ’05, or was it … ?
Phil: No, it was later than ’05. I think we’re looking at 2009 was the highest home ownership rate in America that we had seen.
Jeff: Wow. Only because I had a specific question in regard to that idea. We see the trend, actually from your report is where I pulled it.
Jeff: I’m sorry, I know, I’m picking out this hair off your head, and this hair off your head. I’m like, tell me about why, this long … But we’re seeing people be in homes longer.
Jeff: Right, this economic downturn. Have you started to see a shift in that? Because what we see is, I call the category, people being frozen.
Jessica: Mm-hmm, yeah.
Jeff: Because they can’t do anything until their house is worth … They’re not under water.
Jeff: Because a frozen cube stays above water, but still they can’t move.
Jessica: I think the ice floats on the water, I’m not sure.
Jeff: That’s why it’s not, it’s frozen, it’s hanging out. But this category we have, because we … No, I’m wrapping this in the demand question.
Jessica: I’ve gotcha. I see where you’re going here.
Jeff: In Phoenix, hundreds of thousands of people that are still frozen from the price that they had it. So we’re seeing that curb the amount of, I think that’s the number one reason why their supply is down.
Jessica: So we did see, the typical tenure that you would want, and that we have seen historically, is 6-7 years, that someone would stay in their home before they had a life event, before that caused them to move. So whether that’s a new job or a new baby, a marriage, divorce, so on. You have something in your life that happens and it causes you to move. Today, we’ve seen that tenure in home rise to a peak of ten years. This last report, we saw it go down to nine. We are seeing some small shifts there. That being said, we’ve seen in bounce around nine and ten for the last few years. So is that a trend, we don’t really know.
Phil: That was actually-
Jeff: You don’t even have the 2009 answer, you accused me of being a little hard on you, but you knew the answer.
Jessica: I did know the answer. As far as the tenure in home goes, yes, there’s a lot of reasons why people may have owned that home for a longer period of time. Yes, they may have been under water. Those who purchased their home eight to ten years ago, about a quarter were still under water when they sold their home this last year. Or they felt like they wanted to delay, because they didn’t have the funds to actually sell their home. So they’re not under water currently, but they were in the past, and that did keep them there.
Jessica: You could see that inventory lighten up a little. In that home survey that I mentioned, the one that we’re doing on a monthly basis, the last quarter of data, we release it on a quarterly basis. We saw that 77% of owners think, you know what, now is a good time to sell. I finally perhaps have equity in my home, we’re seeing home prices increase. Maybe we’re seeing a little more equity in my own market, and this could be a good time to get on that merry-go-round and actually sell my house.
Jessica: That being said, there’s a lot of people who might be fearful right now, in really tight markets and markets that are still pretty tight. They may be saying, you know what, if I sell my house right now, am I going to find that next home? So in a really healthy market, you want 6.5 months of supply. Right now, we’re still at 4.4 in the latest month’s data, so we’re still pretty tight. Even though there’s a little inventory coming on the market, it’s still historically on the tighter side.
Jeff: Right. Are we including homes that are under contract in that number, or pendings, or just under contract, not pending?
Jessica: No. So that’s the available inventory in the market, in that month’s supply number. So we’re still not seeing … There are some markets, though, that are starting to see inventory. But the inventory where we really want it, is at that entry level price point. So for those first-time home buyers who are suppressed.
Jessica: Or potentially people who want to downsize, we’re not seeing that as a huge trend anymore. That’s likely because those smaller, more affordable condos aren’t available on the market.
Phil: We see downsizers in our market.
Phil: That’s interesting.
Jessica: You are seeing them now?
Phil: We had been seeing them. But with you, obviously I’m going to pay more attention to whether that’s becoming more popular or less popular.
Jeff: I mean, to me, downsizing has become more popular, because what we’ve seen, based upon the last stat you said that … I read in your report last year-
Jeff: … that because the people, this is just a summation of it. Because the people have lived in their house longer, meaning almost 10 years, they’re predicting that they’re going to be in their next home longer?
Jeff: They’re choosing to release themselves from the burden of a bigger house, which I didn’t see ten years ago. They’re selling quicker. I don’t know how that shows up in your report, but they’re choosing to downsize. And they all want one level, no steps, because they feel like they’re going to be in it for the next 15 years, because they’re living longer.
Jeff: I don’t know if you do any stats on living longer?
Jeff: They’re more fearful that they’re going to be bad health or something. But we see that show up in their buying pattens, or wishes at least.
Jessica: Totally. That absolutely makes sense, to so many numbers here. So the median age of a repeat buyer in the market, back in the 1980s, used to be in their 30s, and today it’s in their mid-50s. So that’s a huge shift in your repeat buyer, how old they are.
Jeff: That what I said is true, because …
Phil: Whatever number you would have said, would have said that.
Jeff: So go on? Continue.
Jessica: OK, so more things that you’re true on. That buyer in their mid-50s, that repeat buyer, they’re planning on keeping that home for 15 years, but when you cut that by generations, some generations are actually planning on keeping that for 20 years, they’re saying they’re never moving. This is there forever home. They’re planning on aging in place once they purchase that home.
Jeff: A lot, there you go.
Jessica: Yeah, so that’s definitely a shift, from someone who’s in their 30s, they’re not planning on living there for 20 years, they’re planning on living there for 5 to 10 years. So that is a huge change in the market, and that 50-something-year-old, they’re very likely purchasing a multi-generational home, for aging parents living there, for adult children living there, for children under the age of 18 living there. They’re taking care of a lot of family members in that home, and that home has to fit their needs. Are you guys seeing that there in your local market, multi-generational homes?
Jeff: Yes. Well, I phrase it differently, I say that there’s more boomerang children and boomerang parents that are forcing them to make buying decisions to support lots of people. It seems like the baby boomer, I don’t know if it’s their wealth level, is the highest of the family, and that therefore it has lots of people still relying on that person to [inaudible 00:20:25] the family.
Jessica: Yeah, so really interestingly, definitely a younger boomer issue, right? But this last year, we saw it as a Gen X-er issue too. We thought maybe that was just that particular generation. Younger boomers, sandwich generation, they’re taking care of everyone. But we’re starting to see a growth in Gen X-ers who actually are buying multi-generational homes too. Gen X-ers are hitting their 50, and they’re also that peak earning years, so they’re actually starting to take care of other generations as well.
Jeff: Oh no, definitely, definitely.
Phil: My mother-in-law lives with us, and she helps take care of my three kids, which is a wonderful thing.
Jessica: Wow, that’s amazing.
Jeff: Because you piqued my interest now, because that was a huge shift that to me is spot-on. Obviously, it’s nice to know that I see it and you see it, and that means your data is so freaking good.
Phil: He’s critical.
Jeff: I’m usually not this nice. What other stats that you got that you saw, such a major swing? Because from 30s to 50s is massive. That’s a movement, in my opinion.
Jessica: Yeah, I think that’s a huge demographic shift, right, in that age. One of the things that I think is really fascinating, we added this chart this year, is looking at, we hear so much about millennials, they’re not getting married, they’re not having babies with two legs. So we cut the data all the way back to the ’80s, and we saw that yeah, more than 50% of people back in the ’80s did have children under the age of 18 living in their home, and today it’s about a third. That is a massive drop, in families who have children under the age of 18.
Jeff: You know the data really well, and that moved quicker …
Phil: Yeah, say that again, slow it down a little bit? We’re here with you.
Jessica: OK. Back in the 1980s-
Jeff: Do people today have less kids or more kids?
Phil: Let her do it.
Jessica: They have less kids. There’s less children in homes. The birth rate in the U.S. has dropped to a 30 year low, but we’re seeing on the home-buying side is it’s matching it. So people are not having their buying decisions dictated by children under the age of 18. They may not have children at all, may choose not to have children. They’re purchasing a home for themselves. They don’t necessarily need to be within a specific school district, they instead want to be close to a dog park. They want to be close to a walkable community.
Jeff: Is it because-
Phil: Hold on, hold on.
Jeff: Is it because they’re buying a VRBO property and they don’t care?
Phil: No, no. Our studio audience lives 100 yards from a dog park, right? I think you’re hitting the nail on the head here. Your four-legged child, I like that you specified two legs versus four. The four-legged children are now taking more precedent in the home-buying decision.
Jessica: Absolutely. For some buyers, that is the most important for them. For unmarried couples, one in five of them said my neighborhood preference is driven by my proximity to the vet and to a green space for my dog. That is a huge shift in home buyers today. Millennials get a bad rap about not having kids, but their buying preferences are still driven by something outside of their own selfishness to their coffee shop, it’s driven by their pet.
Jeff: Wow, I love that.
Phil: I mean, the marketing ideas-
Jeff: Yeah, I know.
Phil: … we should start talking like that. You got work to do, buddy, we’ve got to start, we need the dog pack.
Jeff: Wow, right. Sibbach Dog Park.
Phil: We need the dog park … We used to have a golf course map, now we’re going to have a dog parks map.
Jessica: There you go.
Jeff: We’ve blogged about dog parks and-
Phil: Not enough, clearly.
Jeff: Not enough, yes. All right. We’ve got some questions we’ve got to get to, I don’t want to take up too much of your time.
Phil: I do, I think this is fascinating.
Jeff: Yeah, right, you’ve been wonderful. Thank you for bringing the vibrance that you have.
Jeff: We have this thing called putting the consumer first in real estate, and actually why we brought up Zillow is we see corporations leading the realtor population, being more consumer-oriented, meaning when we hear, we’re from Open Door, because they’re listening to the consumer. Like, you’re doing the study, and you’re doing it for the agents, but I don’t know that the agents are responding to the consumer as much as we hear them speaking out through your report.
Phil: Well, the questions that we typically ask our guests are geared towards them, who are working with consumers. I think that we actually shifted the questions for you, because instead of asking you the three things that we think the consumers are asking for, I’d like to instead ask you, what are the consumers asking for?
Jeff: What are the three most important things that you see home buyers asking for today?
Jessica: So the number one thing, and this has actually grown in importance with tight inventory. The number one thing is just finding the right home. More than half of buyers are saying, what I want from the agent is just to find the right home. It used to be, helping negotiate contract terms, and they were closer in range. That those would be understanding the process-
Jeff: Find the home.
Jessica: … especially for first-time home buyers, just find the home.
Jessica: And that’s so important for all home buyers. It doesn’t matter how you cut that data, it’s the number one priority.
Jeff: By a lot.
Jessica: I think it was three years, that’s been the most important and the biggest struggle in the home search process is finding that right home.
Phil: My assumption is that whenever the inventory drops to the levels, like it is now, that one grows in popularity.
Jessica: Absolutely. I would definitely say that.
Phil: That’s frustrating, that’s the frustration, that people can’t find that house, and so they’re eager to tell you on a report that that’s the reason, that’s what’s wrong right now. My agent couldn’t find me the house.
Jeff: So what suggestions do you make then, for agents that are choosing to let the consumer find the home on their own?
Jessica: Right. And that’s what we see in the data too, is that people are finding their home online. It’s the number one thing. You’re constantly searching. But the consumers, who just bought a home, what they say that they want from their agent is, tell me exactly when a home is listed. Tell me when something goes under contract. Give me real time updates as fast as you can. Make sure that I’m on those email lists. Make sure you’re sending me the text messages, so that I can get that information as quickly as possible. And that’s what we’re hearing from consumers, just as fast as possible can you send me that information.
Phil: I love that. That changes, I mean, I just looked at Mo while you were talking, and I said, we’ve got to make sure adjustments. Because what you’re saying right now, I mean, we have based business processes on this report for years.
Phil: Now, to hear today’s version, I think nothing’s gonna change. We’re still going to base our business processes based on what the data is showing today, so I’m excited. Actually, just a plug for the report, it comes out this week in Boston, right?
Jessica: Yeah, so the main report came out on Monday. So it’s out, go and get it. I recommend it highly. There are spin-offs of this report, we do about five different spin-offs. The newest spin-off will be out on Friday. So we’re going to have a bunch of buyer bios, and it’s essentially twenty different profiles. So, looking in depth at a single female buyer, who’s 18% of the market. That’s huge, and we give you twenty different data points on her, and her home-buying practice. Looking at unmarried couples. Looking at those people who say that pets are number one, and we give you in-depth data, so it’s about 400 different data points on all of these biographies of buyers.
Phil: I think that’s sweet.
Jeff: Yeah, it’s awesome.
Phil: Right? Let’s see here. The main report was released on Monday, and where do they go to download that main report? Or do you have to buy it …
Jessica: Anywhere with a realtor, you can grab it on a store, the highlights are there for free, all of the information is there. Tons of infographics already posted on the report. If you’re at the annual convention, I’m going to be doing a bunch of presentations, so I will be there talking about this.
Jeff: Do you do a book signing?
Jessica: Yes, I will sign your iPhone, because it’s only PDF.
Jeff: All right, but Phil, he likes the brush, but we’re not down with buyers, where I’m at.
Phil: Well, you said one, and you loved her answer so much, you’re like OK, how about the seller? Like, what were number two and three, as for the top three-
Jessica: [Crosstalk 00:29:18] with the process.
Phil: What’s two and three for the buyer before we move over to the seller?
Jeff: Find a house.
Jessica: All right. In no particular order, because it’s going to change based on a first time versus repeat buyer. When you’re looking for all buyers, number one, finding the right home. Understanding the process for your first-time home buyers. They’ve never gone through this, again, this process. Understanding the faults and features in a process. Do not get overwhelmed by the granite and stainless steel, see if you have a leaky roof.
Jeff: The faults and features, is that what you said?
Jessica: Yes, the faults and features of an actual property. So actually understanding what is this property, besides all of the shininess that I see right here. Besides and behind that home staging, what’s going on in this home, that that realtor expert can tell you that no one else can. They’re going to bring that expertise, they’re going to bring the home inspection in-
Jeff: Yeah, I love that. That’s actually what we’re looking for.
Phil: Hey, I love this.
Phil: This is great.
Jeff: This is great stuff. That’s number two?
Jessica: Top three. And then helping negotiate that contract. They’ve never gone through this process, all buyers have confusion on that. So those are the top ones. And when they’re looking for an agent, they want your reputation, they want a reputable agent. They want someone who’s honest. They want that expertise in the neighborhood. Those are the top sort of behavioral traits that they’re looking for.
Jeff: Yeah, can you talk about that? Number one, the top three for an agent before we get to the seller was what?
Jessica: Honesty and trustworthy, reputation, and just understanding the neighborhood and the real estate process. Those ones all together, they’re all together, they’re all in the top 90s percentiles for those. It’s not surprising.
Jessica: Those traits are the selling side as well. When you go look for an agent, you want someone who’s honest, who’s trustworthy, who has a good reputation. You want them to be an expert in their field, and you want them to be an expert in that neighborhood.
Phil: Do consumers say that realtors puff a lot?
Jessica: You know, I didn’t collect a data point on that one.
Phil: You didn’t? I thought you were talking about, there were some interesting data points. Maybe I misunderstand that conversation earlier.
Jeff: OK. I mean, we work in a very competitive marketplace, and you say that I want to be an expert. When I compete a lot, I hear that they’re interviewing the three top number one teams in the valley. How can that be? And then the guy that lists their house is not one of those, that I am familiar with, so I don’t know.
Phil: Tough, tough.
Jeff: Sorry, I just …
Jessica: Yeah, I don’t know where you’re going with that.
Jeff: I feel that putting the consumer first, part of it is being honest with what you really are, based upon your experience. We try to push people for more reviews to demonstrate.
Phil: But I think with this interview, and another thing I learned from this interview is that we need to get more reviews on relator.com, because we don’t have enough reviews … Oh my gosh, it’s morning.
Jeff: Are you OK?
Phil: Are you all right? Is the lamp falling?
Jessica: This is a hotel room. It was just the light, it’s good. I’ll fix it later.
Jeff: OK, so in wrapping up-
Phil: No, wrapping up? Sellers.
Jeff: Oh, sellers. What the heck?
Jessica: So sellers, selling your home within that time frame that you actually want to sell it in. Within that short time frame, especially when you talk about those sellers who have been holding onto that property for an extended period of time … When they finally can sell and they want to sell, they want to do it within a specific timeframe. Especially tying that to school districts, or the new job, or something that they really want to do. Actually pricing that home competitively, very difficult in this market, with home prices shifting. Marketing that home, when you look at FSBOs, they don’t know how to market their home, they’re not marketing their home for the most part.
Jessica: So marketing their home, and then finding that qualified buyer for that home. Those are the top four things.
Phil: Four, did I miss one?
Phil: Which one, can you say the four one more time?
Jessica: Time frame. Selling within a specific time frame. Pricing the home competitively, finding a qualified buyer, and-
Jeff: And marketing.
Jessica: … Yes, and marketing that home. They all switch, but I would say that they have been close to 20% in recent years, but one of those is trailing around 14% right now.
Jeff: Are the consumers still feeling the importance of realtor during the search process?
Jessica: During the actual home buying process, I will say that the use of an agent on the buying side is at 87%, it’s near an all-time high. People even when they’re buying through a builder, they’re actually using an agent to represent them during that process, so they really want agent representation. On the selling side, FSBOs are actually at 7%, it’s the lowest number we’ve ever recorded since 1981.
Jessica: That is really impressive, and that really shows how much our buyers and sellers are saying I liked my agent, I liked the process that I went through, because I like my agent who represented me through that, and I’ll use that agent again, and I’m recommend them to others. And that’s really where most buyers and sellers are finding their agent, is through recommendations, through referrals, having that good experience and then referring them on.
Phil: Yes, wonderful. How many data points do you track?
Jessica: In this report, there’s like 200 charts, and we have about 200 reports that we do every year. The ones that you named were the big ones, but there’s a lot of reports that we do here at NAR Research.
Phil: Do you break them down regionally?
Jessica: We break as much as we can down regionally. There’s some reports that it’s not able to do that, or it’s more of a national issue. But for this report, some of the data points are broken down on a regional level, yeah.
Jeff: Do we have any questions out for our audience, anyone that wants to ask Jessica a question, now would be the time.
Phil: As we’re getting ready to wrap up, I actually have another question for you.
Jeff: I do too.
Phil: I’ll let Jeff go first.
Jeff: Well, I wanted to know what we should have asked that we didn’t ask, that you learned that you’re like-
Phil: Oh, I got two questions.
Jeff: … ‘Don’t be so dumb, don’t be so dumb, this is the point, and this is what you should be doing more of’. What do you know that we need to know?
Jessica: I talked about the drop in children under the age of 18. I think it’s fascinating, the drop in marriage rates in the country is also mirroring what we’re seeing on the home buying side. For first time home buyers, a little over half are married, but there’s a growing share who are unmarried couples, the largest that we’ve ever recorded, unmarried couples out there purchasing homes. Maybe they’ll get married in the future, but they’re not married now.
Jessica: And we’re seeing single females, they’ve always been second only to married couples in the market, but they are a significant share. It’s 18% of all buyers. We’re also, this year, we’ve always seen single males trail behind. This year, we saw a growth in single males in the market. I think that’s really interesting. They’re actually starting to get out there, purchase a home, choosing not to get married. Maybe they’ll get married later, but they’re out there buying. There’s also a Golden Girls phenomena, and I guess you can say-
Phil: Bea? Bea Arthur?
Jessica: They’re not romantic partners, purchasing homes together, likely have a legal contract in place. We don’t ask detailed questions on that. But they’re actually a share of the market as well. So, know the value of home ownership, see the wealth-building tool that home ownership can be, and want to purchase a home.
Jeff: We see a lot more divorces leading to that situation, to be honest with you, where they have walked out of the baby boomer relationship they had, but they’re well-funded. But they want to own themselves, they want the pride of ownership, so-
Phil: Across the country, we have a comment from one of our visitors, but I’m just curious, how many home buyers were there. I know you studied 7,000 of them. That’s a sample of how big?
Jessica: That’s a great question. We send out the survey to between 150,000 and 200,000 on an annual basis. For this particular year, our response rate was about 5%. That’s about what you probably will get from a mail survey, from someone who doesn’t know us necessarily.
Jessica: We mail out these surveys. So it is paper that goes to someone’s mailbox, so we’re not getting vacation buyers, we’re not getting investors, we’re only getting primary residence buyers.
Jessica: It is a particular segment of the market, but we do that on purpose. We want to be able to track primary residence buyers as opposed to vacation and investors.
Phil: OK. Then you feel, the comment from Facebook, I can’t see the name of the commenter.
Jeff: Jim Mitchell.
Phil: Oh, Jim Mitchell, I could have guessed. Jim, good to see you. The home buyer survey, naturally a higher number would be better, but do you feel that 7,000 surveys you received back is an accurate representation of buyers, given that-
Jessica: We do.
Phil: … He said, given that home sales exceeded six million in 2017.
Jeff: But it’s not-
Jessica: We do. Yeah. We absolutely do. We want to make sure, in all of our research that we do at NAR, that our margins of error are really tight. That’s the nerdy way of saying, what’s your number, is it plus or minus what? Our margin of error on the profile of home buyers and sellers is just over one percent. We are very confident in the data that we’re getting back. You can’t survey six million people, you can’t survey four million people. But what you can do statistically is say, is this representative of the population, and we can confidently say yes.
Phil: And we can confidently believe you.
Jeff: So your, hold one on second, I want to make sure that I get this right. Your thesis is titled, Is the Dream Still Alive question mark. What’s the answer?
Jessica: Yes. The dream of home ownership is very strong. Right now, what I’m really looking at-
Jeff: Do you think you’re going to pass with that answer?
Jessica: They’re going to be much harder than this, I’m sure. What I’m looking at really is the drop in the home ownership rate for African-Americans, Hispanic-Americans, and those under the age of 35, and how it hasn’t rebounded since the recession. So we know that those populations want to own homes. We know, through the profile of home buyers and sellers, that they’re getting into home ownership if they can. If they have higher incomes, if they have parental help, but we know that those three populations are having a hard time entering today.
Phil: And what’s your favorite stat, all all the 200 reports that you do and all the 5 million data points, what’s the favorite thing that you track?
Jessica: All right, so the favorite thing of late has been the animal numbers. I have two cats, I had a dog, she passed away.
Phil: Sorry about that.
Jessica: I really had my own home buying decisions, really … My pets factored in. And we’re seeing that. The other thing that I’m really loving that I’m working on right now, is on Friday we’re going to release a report called Real Estate and Marijuana, A Budding Issue. Pun.
Jessica: We’re looking at the commercial and residential impact of marijuana, and looking at the states, and actually seeing in states where it’s legal for prescription use only, and then recreational and prescription, how much are our members actually being impacted by this? Are they leasing, do they have addendums, what’s happening there. That’s been a fun report to work on.
Phil: That’s as far as the member profile report, as opposed to the home buyer and seller report?
Jessica: It’s not the member profile itself, but it is a survey of members.
Phil: Of members, gotcha. What is the average age of realtors these days?
Jessica: It’s been tracking down. It’s still in the mid-50s. We did see a peak around 58, but in the last few years it’s been tracking down. I think we’re at about 54 right now. There’s a lot of new members who are entering the business. We’re actually seeing a growth in younger members.
Jessica: It’s still not a lot of younger members out there, but we are seeing younger members enter.
Phil: Cool, good.
Jeff: I’ve got a question. Are you seeing, if you’re querying members, more agents be a part of a corporation, versus being-
Phil: W2 versus the 1099.
Jeff: Yes. Is that a trend that you track?
Jessica: Yeah, that’s a great question. I don’t think those shares are actually changing in recent years. I think we’re still seeing that most people are contractors. Now we just did release a report on real estate teams. That’s obviously a growing issue, and people are working on real estate teams, they’re embracing that model. But I don’t know, as far as contractor versus employee, if I looked at those numbers if there’s been any change in that.
Jeff: When you see a big shift in it, I don’t know if something that we can get you to track, not that you have to, but I just think that we … Red Fin has employees, and Open Door has employees, and I wonder how many agents that Zillow employs. We have employees on our teams that are agents as well.
Phil: I thought it was fascinating when she talked about real estate teams, she said the real estate teams issue.
Jessica: I mean hot topic, I don’t mean issue.
Phil: Oh, OK, hot topic, got you.
Jessica: I think we actually got a hot topic report.
Phil: Do you know what percentage of-
Jeff: Business is done by teams?
Phil: … or members is by teams?
Jessica: So it’s more than a quarter for teams, of agents are member of a team. I don’t know the exact number, but I know that it’s more than a quarter.
Jeff: Is it still heading upwards, that number?
Jessica: We’ve only done one in-depth report on real estate teams. As far as collecting a data point on other reports, we have collected one off data points. It’s different populations, so it’s not an apples to apples to comparison. We’re hearing it anecdotally from our members that it’s increasing, so that’s why we wanted to do the report on it.
Jeff: The thing is, we went to Zillow, and it seems like the industry is almost favoring … I’m sorry, the consumers are wanting what they called a corporate-like response, rather than a personal response, meaning like an individual. Their demand for data is so acute, I don’t know if that’s the right word, but they want it so fast that individuals … It’s hard to live your life when you’re held to that standard all the time. You get jittery. Even-
Phil: Even when we’re on a podcast. Even when we’re talking. Wait, was that a lead? Oh.
Jeff: How many times do you usually go to NAR’s conference?
Jessica: I’m an NAR employee, so I usually go every year.
Phil: Every year, a couple times a year.
Jeff: Well, I didn’t know. Sometimes, we went to Zillow and all the Zillow employees weren’t there. You know-
Phil: She’s presenting.
Jeff: … You’re a higher-up, you’re presenting, of course.
Phil: Good luck on the presentations, by the way.
Jeff: Yeah, good luck.
Jessica: Thank you.
Jeff: What’s your title of your presentation?
Phil: Of a favorite one.
Jeff: The favorite one.
Jessica: Oh, my favorite one is High Times in Real Estate, that’s on the marijuana report.
Phil: I’m starting to get a sense of who you are as a person here, Jessica.
Jeff: Where do you live?
Phil: Is it legal in D.C., right? Has that affected your buying? Well, before you answer that and incriminate anything, it was awesome, thank you so much. You certainly did not disappoint in any way. You were spectacular.
Jessica: Oh, thank you.
Phil: Maybe we can have you back on once you’re Doctor Jessica. Good luck, thank you.
Jeff: Happy Wednesday, thanks for your time, we really appreciate it.
Jessica: Thank you.
Thank you for listening to The Solution, hosted by Jeff Sibbach and Phil Sexton. Follow them on SoundCloud.com/AskJeffAndPhil.com, or download the Apple podcast app and search for The Solution, hosted by Jeff Sibbach and Phil Sexton.