Out of all adults younger than 35, the share of active-service military members who purchase a home significantly outpaces the share of non-military homebuyers. According to the National Association of Realtors® (NAR) first-ever study of military clients, the 2016 Veterans & Active Military Home Buyers and Sellers Profile, young military buyers jump in the market because of household demographics and cost-effective financing options.
Military niche has younger buyers, bigger homes
The survey also discovered that while virtually all veteran and non-military sellers and buyers use an agent, usage is virtually universal among military members that are still on active duty.
NAR’s survey compared military buyers and sellers to the general population. Of all the homebuyers, 18 percent identified as veterans and 3 % as active-military. Of all home sellers, 21 percent identified as veterans and one percent as active-military.
The results revealed several contrasts, NAR says. 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 more likely to be married and also have multiple children residing in their household. As a result, they typically purchased a larger home that cost more compared to those purchased by both non-military buyers and veterans.
Active-service buyers (ages 18-35) bought homes at a much greater rate (51 percent) than non-military buyers (34 percent), says Lawrence Yun, NAR chief economist.
“More stable job security and no-downpayment financing options give aspiring homeowners in the military a deserving advantage over their civilian peers,” says Yun. “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 (VA) loans – which offer over 100 percent financing for veteran and active-service homebuyers – were the most popular type of loan for active-service and veteran buyers, leading to virtually all active-service buyers financing their whole home purchase and veterans putting down a median downpayment of 5 %. For non-military buyers, the median downpayment was 11 percent.
“Current data shows that VA loans perform remarkably well and are a safe and affordable choice,” says Yun. “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 generally one of the few constants for the families of the brave women and men defending our country, says NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “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.”
Only five percent of veterans and 3 % of active-service buyers said saving for a downpayment was the most challenging step. Of those, only 4 % of veterans and 13 % of active-service buyers said student loan debt delayed saving. Sixty-two percent of veterans cited having some other type of debt and 43 percent of active-service military referenced personal credit card debt.
While an increased 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 under buyers who’ve never served in the military, which was $86,500. Active-service buyers typically purchased 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 % 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 main 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.
Active service and veteran sellers and buyers depend 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 active-service members desired convenience to their job the most.
While virtually 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 % versus 88 percent for non-military buyers). As a group, they were also most likely to utilize mobile or tablet search engines and relocation companies throughout their search.
“Many Realtors are veterans themselves, and they 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:
Military sellers were younger, significantly more prone to have multiple children living in their household and sold a property in a suburban area at a far higher rate.
The use of an agent was highest for active-service military sellers (94 percent), who – likely dealing with relocating to a different area in a short timeframe – cited both wanting help marketing the house to potential buyers and help negotiating and dealing with buyers at a far higher rate than non-military sellers and veterans.
89 percent of veterans used an agent, on par with non-military sellers (90 %).
For non-military sellers, one of the most commonly cited reason behind selling their house was that it was too small (18 percent), while the most frequent reason cited by veterans would be to be closer to friends and family (23 percent).
Job relocation for active-service military sellers was the most common reason for selling (43 percent).
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