Differences in household demographics and affordable financing options spur homebuying demand for young active-service military members, causing them to significantly outpace the share of non-military homebuyers under the age of 35, according to the first-ever 2016 Veterans & Active Military Home Buyers and Sellers Profile, which evaluates the differences of recent active-service and veteran home buyers and sellerscompared to those who’ve never served. The survey also found that while nearly all veteran and non-military buyers and sellers use an agent, usage is practically universal among active-service military members.
NAR’s survey gathered greater insight into how each population of buyers and sellers differs and is similar to those who have never served in the military. Of all homebuyers, 18 percent identified as veterans and three percent as active-military. Of all home sellers, 21 percent identified as veterans and one percent as active-military.
The results revealed quite a few contrasts between active-service military buyers and buyers who’ve never served. At a median age of 34 years old, the typical active-service buyer was a lot younger than non-military buyers (40 years old) and was more likely to be married and have multiple children living in their household. As a result, they typically bought a larger home that cost more than those purchased by both non-military buyers and veterans.
Lawrence Yun, NAR chief economist, says young active-service buyers (ages 18-35) bought homes at a far greater rate (51 percent) than non-military buyers (34 percent). “Despite having a lower median income ($76,800), more stable job security and no down payment financing options give aspiring homeowners in the military a deserving advantage over their civilian peers,” he says. “Furthermore, their tendencies to marry and raise a family at an earlier age and carry less student debt make buying a home a more desirable and achievable option.”
Veterans Affairs loans – which offer over 100 percent financing for veteran and active-service homebuyers – were the most popular loan type for active-service and veteran buyers, leading to the majority of active-service buyers financing their entire home purchase and veterans putting down a median down payment of 5 percent. For non-military buyers, the median down payment was 11 percent.
Adds Yun, “Current data shows that VA loans perform remarkably well and are a safe and affordable choice. Their current seriously delinquent and homes in foreclosure rate is 2.78 percent versus 3.44 percent for non-VA loans.”
A place to call home is often times one of the few constants for the families of the brave men and women defending our country, says NAR President Tom Salomone. “That’s why it’s so important to ensure that homeownership opportunities and affordable financing options exist for qualified military personnel, veterans and their families.”
With the ability to obtain a VA loan, only five percent of veterans and three percent of active-service buyers said saving for a down payment was the most difficult step. Of those, only four percent of veterans and 13 percent of active-service buyers said student loan debt delayed saving. Sixty-two percent of veterans cited having other types of debt and 43 percent of active-service military referenced credit card debt.
While a larger share of active-service military buyers had student loan debt compared to non-military buyers and veterans, their debt balances were typically lower. Among active-service members, 37 percent had student loan debt under $10,000 compared to 21 percent for those who’ve never served.
Active-service buyers prefer large single-family homes
The median income of veteran and active-service member homebuyers in the survey was slightly lower than buyers who’ve never served in the military, which was $86,500. Active-service buyers typically bought a 2,170-square-foot home that cost more ($226,000) than those purchased by non-military buyers and veterans. Veteran buyers had a median income of $84,000, and they typically bought a 1,980-square-foot home costing $220,000.
Mirroring the general population of buyers, over 80 percent of both veterans and active-service buyers purchased a single-family home, with those currently serving purchasing single-family homes at the highest rate (87 percent).
The primary reason for the home purchase for active-service military was job relocation, followed closely by the desire to own a home of their own. Compared to non-military buyers, veterans were more likely to want to be closer to friends and family or moving for retirement.
Increased mobility means active-service and veteran buyers and sellers rely on real estate agents
Veterans and active-service buyers purchased a home a lot further away from their previous residence (at 75 miles and 28 miles, respectively) than buyers who never served in the military (10 miles). Among the biggest factors influencing neighborhood choice, veterans were most influenced by the quality of the neighborhood, while convenience to their job was desired the most by active-service members.
While nearly all buyers predominantly used the Internet and a real estate agent during their home search, active-duty buyers used a real estate agent at an even higher rate (95 percent versus 88 percent for non-military buyers). As a group, they were also most likely to use mobile or tablet search engines and relocation companies during their search.
“Many REALTORS® are veterans themselves, who understand the unique housing needs of those serving our country,” says Salomone. “Whether it’s relocating to a completely new area across the country or needing to sell their home in a short timeframe, REALTORS®are committed to helping active-service members and veterans succeed in their homeownership goals.”
Some of the characteristics of active-service sellers differed from non-military sellers. They were younger, far more likely to have multiple children living in their household and sold a home in a suburban area at a far higher rate. Additionally, the use of an agent was highest for active-service military sellers (94 percent), who – likely dealing with relocating to a new area in a short timeframe – cited both wanting help marketing the home to potential buyers and help negotiating and dealing with buyers at a far higher rate than non-military sellers and veterans. Eighty-nine percent of veterans used an agent, on par with non-military sellers (90 percent).
The most commonly cited reason for owners selling their home varied. For non-military sellers, the most commonly cited reason for selling their home was that it was too small (18 percent), while the most common reason cited by veterans was to be closer to friends and family (23 percent). Not surprisingly, job relocation for active-service military sellers was the most common reason for selling (43 percent).
For more information, visit www.realtor.org.