Real estate is an integral part of the lives of countless Americans. Whether you're a buyer, seller, or agent, the housing market plays a significant role in your financial future. Since the Housing Market Crash of 2008, real estate prices have rebounded and, in many locations, surged to unprecedented heights. The COVID-19 pandemic has only further intensified this trend, driving prices up even more in many parts of the United States.
If you're curious about the state of the US real estate industry and want to learn some jaw-dropping statistics, you're in luck. We have gathered essential facts about the US real estate market to give you a comprehensive overview. Let's dive right into it!
General Real Estate Industry Statistics
Owning a home is often considered part of the "American Dream." However, rising housing prices have outpaced the incomes of many Americans. Here are some key insights we discovered through our research:
-
In 2022, there were 5.95 million homes sold in the US, a steady increase since 2011 when the number was only 4.57 million per year. Sales are expected to rise again in 2023.
-
San Francisco, California, boasts the highest median selling price for US real estate at an astonishing $1.36 million. Additionally, San Francisco has the highest average 5% down payment, amounting to $68,000. These numbers have surpassed other cities due to the neutral market conditions in San Francisco.
-
Manhattan, New York, has the most expensive cost per square foot in the US, standing at $1,400. While it comes as no surprise that Manhattan is one of the most expensive cities in the country, the buyer's market here is starting to impact prices. For instance, the median listing price in 2020 was $1.6 million, but the median selling price was only $950,000.
-
Houston, Texas, currently has one of the best and most popular real estate markets, with a healthy median listing price of $342,000. Unlike Austin, which has seen massive price increases in recent years, Houston remains one of the most affordable real estate markets in the US.
-
Washington state has the most competitive real estate market, with 44.74% of homes selling above their listing price. Additionally, an average of 68 homes are sold per month within two weeks of being listed. The growth in this market can be attributed to large tech companies offering job opportunities, such as Microsoft.
Housing Market Statistics
The real estate housing market is highly competitive, expensive, and currently facing significant shortages in the US. However, this isn't the case everywhere. Let's explore some crucial facts:
-
As of 2022, there are 143.8 million housing units in the US. Although this may seem like a significant number, the growth rate has remained stagnant, increasing by just over 7% since 2010. Comparatively, between 1980 and 1990, the growth rate was over double that at 18%. In 2020, the total housing stock amounted to 140.8 million housing units, indicating a 3 million increase from the previous year.
-
The average down payment for a home in 2023 is $24,100. While this may appear substantial, it accounts for a small percentage of the average home cost, which exceeds $250,000. On average, the down payment represents only around 13% of the borrower's loan value. Notably, most banks require a 20% down payment to eliminate mortgage insurance.
-
As of Q3 2022, the median home price in the US was $392,000, representing an 8.9% increase compared to 2021. Furthermore, the median price has more than tripled since 1999 when it stood at only $111,000.
-
In May 2023, the median cost of a new home in the US is $436,800, more than double the price of a new home in 2000. However, prices for new homes slightly decreased between 2021 and 2022.
-
On average, it takes approximately 56 days to close a loan on a home purchase in the US. This timeline includes various steps such as finding an agent, getting mortgage pre-approval, making offers, inspections, final mortgage approval, appraisals, and more. It's important to note that this figure does not include the average four and a half months it takes to find the right home.
-
As of 2023, there are roughly 16 million vacant houses in the US. Although this number has decreased from 17 million in 2019, it remains significant, especially considering the over 580,000 homeless population across the country.
Real Estate Agent Statistics
Real estate agents play a crucial role in the process of buying or selling a home. The vast majority of Americans rely on agents for assistance in their home transactions. Here's what our research revealed:
-
As of 2023, there are approximately 1.46 million real estate agents operating in the US, marking a 29% increase since 2012. Additionally, there are currently 106,548 real estate brokerage firms in the country.
-
Pennsylvania is currently the #1 state for real estate agents. Although states like New York may surpass Pennsylvania in terms of average annual salary, Pennsylvania offers a lower cost of living, making it an attractive destination. The average annual salary for a real estate agent in Pennsylvania is a healthy $96,244. Moreover, the state has a whopping 1,743 real estate job openings, more than any other state.
-
The average commission for a real estate agent is 6% of a home's sales price. This means that if a house sells for $250,000, a real estate agent stands to make around $15,000 from the transaction. It's important to note that this commission is split between the buyer's and seller's agents.
-
Shockingly, 87% of real estate agents fail within the first five years of starting their career. Many individuals enter the profession enticed by the potential for high earnings, but it's not as simple as it appears. The sheer number of realtors in the US makes it challenging for many agents to find leads and secure deals.
-
The first real estate agent a potential homebuyer contacts is the one they are most likely to work with. In fact, 75% of homebuyers choose to work with the first agent they contact. An additional 15% may opt for their second choice, indicating the critical importance of making a strong impression during the initial interview. Furthermore, 33% of buyers decide to work with a realtor they've worked with previously.
Real Estate Industry Trends and Predictions
The real estate industry has been on an upward trajectory for several years, even in the face of the COVID-19 pandemic. Will this trend continue? Our research suggests the following:
-
From May 2020 to May 2021, overall home prices across the US increased by a staggering 13.2%. This figure varies across popular destinations, with Austin, Texas experiencing a 30.5% increase, Phoenix, Arizona observing a 23.5% increase, and Salt Lake City, Utah witnessing a 20.6% increase. For instance, a home worth $300,000 in Austin in May 2020 would now be valued at $574,000 in 2023.
-
On average, homes appreciate by 3.5% to 3.8% per year, which starkly contrasts with the over 13% appreciation experienced in the past year. Comparatively, during the Great Recession of 2008, there was an appreciation rate of -12.7%.
-
Growth in housing prices is expected to slow to 4.4% in 2022. Experts predict that the housing market will stabilize, which is good news for both buyers and sellers. However, experts assure that the market is unlikely to crash.
-
From 2016 to 2026, the US real estate industry is projected to achieve a Compound Annual Growth Rate (CAGR) of 7%. This growth aligns with the overall global forecast of 8%, indicating growth in the real estate industry worldwide.
Home Buyer Statistics
With all the recent changes in the real estate market, you may wonder how homebuyers have navigated the challenges. Here are some key insights:
-
Millennials (aged 22-40) represent the largest generation of homebuyers, accounting for 37% of the market. Among millennials, those aged 31-40 are the largest group of homebuyers, comprising 23%. However, baby boomers and Generation X still hold significant market shares, with 18% and 24% respectively, indicating that older generations still have significant influence in the market.
-
On average, homebuyers visit ten properties before finding the perfect one. This process generally spans several weeks, although the number of homes viewed can vary greatly.
-
A staggering 81% of millennials (aged 22-38) find homes through mobile apps. In contrast, only 54% of baby boomers (aged 73 and older) use mobile apps, although older generations express higher satisfaction with online home-buying services. Specifically, 72% of individuals aged 73 and older reported satisfaction, while the satisfaction level for those 38 or younger was around 60%.
-
On average, Americans spend 16.4% of their income on housing. While this represents a high figure for the current decade, historically, it is relatively low. Experts generally recommend not spending more than 30% of your income on housing expenses.
-
As of 2021, 88% of buyers rely on real estate agents or brokers to facilitate their home purchases. This marks a significant increase from 2001 when only 69% of buyers used real estate professionals to assist them.
-
The average income of first-time homebuyers in the US is $67,342 per year. However, it's important to note that at least half of first-time homebuyers earn less than $60,000 annually.
Frequently Asked Questions
To wrap up our exploration of the US real estate market, let's address some frequently asked questions:
-
How many real estate agents are there in the US in 2023?
As of February 2023, there are over 1.53 million real estate agents operating in the US. These agents work either independently or within the 106,000 real estate brokerage firms across the country. Real estate can be an attractive career option, given the high average salary of over $90,000 per year. However, it's crucial to understand the market, network, and continually develop your skills since a staggering 87% of real estate agents fail within the first five years.
-
What is the worth of the real estate industry?
The US real estate industry is valued at $222.3 billion. This figure pertains to real estate agents, brokers, and other professionals involved in buying and selling properties. It's important to distinguish this value from the worth of actual properties. For instance, all commercial properties in the US are estimated to be worth $16 trillion, while the total housing stock amounts to roughly $43.4 trillion.
-
Is the real estate industry growing?
The real estate industry is experiencing growth, although the pace remains relatively steady. The projected growth rate for the industry in 2023 is 0.6%. However, the actual property values rose rapidly from 2021 to 2022, with an increase of 14.8%. For context, average yearly price increases typically do not exceed 3.8%.
-
Is the real estate industry concentrated?
No, the real estate industry is not concentrated. Typically, the industry is diverse and specific to local areas. Although some markets may exhibit higher concentrations, broad conclusions cannot be drawn. It's worth noting that Real Estate Investment Trusts (REITs) contribute to concentration in the real estate market and are often excluded from industry concentration studies. This exclusion may impact the perceived concentration in certain areas.
-
Is it hard to be successful in real estate?
Yes, achieving success in real estate is challenging. A staggering 87% of real estate agents fail within their first five years. Many individuals underestimate the amount of work, the need for effective marketing, and the importance of interpersonal skills in the industry. While real estate offers flexibility, it demands significant time, energy, and financial investment to establish oneself. Moreover, poor market conditions and potential financial constraints can also contribute to failure. Successful agents must continuously find new clients and distinguish themselves from the 1.46 million other agents operating in the US.
-
Why do most realtors fail?
Most realtors fail due to the inability to put in the necessary work, lack of effective marketing skills, or deficiencies in interpersonal abilities. While real estate may seem like an attractive side gig, it requires a substantial commitment of time, effort, and capital. Many people underestimate the demands of the profession or lack the financial resources to sustain themselves during slower periods. Furthermore, ineffective marketing can hinder agents' ability to attract clients and sell properties. Additionally, poor interpersonal skills can hinder successful interactions with clients, leading to difficulties in acquiring new leads and closing deals.
-
What is the highest-paying job in real estate?
The highest-paying job in real estate is that of a mortgage loan officer. These professionals facilitate loan approval for homebuyers. Typically, mortgage loan officers operate independently, searching for loan options on behalf of buyers. Acquiring the necessary state and national licenses is a requirement, but the average salary of $152,639 makes the effort worthwhile. Other high-paying real estate jobs include real estate attorneys, compliance specialists, real estate brokers, and property accountants.
Conclusion
Despite an overall price hike of over 15% since 2021, the US real estate market remains stable. Predictions suggest that the market will continue to stabilize, which is good news for millennials, who comprise a significant portion of homebuyers. However, the COVID-19 pandemic has caused considerable disruptions, with a shortage of over 5 million new homes. Additionally, traditional competitive markets, such as Manhattan and Los Angeles, have transitioned into buyer's markets, while cities like Austin, Nebraska, Kansas, and Idaho witness substantial influxes of buyers.
This shift away from major cities in the US can be attributed in part to the rise of remote working. However, the long-term sustainability of this trend remains uncertain.
As the real estate industry continues to evolve, staying informed about the latest trends and statistics will empower both buyers and sellers to make informed decisions. By understanding the market dynamics, you can navigate the real estate landscape with confidence and seize opportunities.
Sources:
- CNBC
- Statista
- Rocket Mortgage
- Insurify
- IBISWorld
- Realtor.com
- NAHB
- Nareit
- Bankrate
- The Ascent
- National Association of Realtors
- Millionacres
- FRED
- Cision
- Zippia
- World Population Review