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first Homebuyers In America, people are getting older.
The median age of first-time homebuyers reached an all-time high of 38 years old, three years older than in July 2023. according to National Association of Realtors 2024 Home Buyer and Seller Profile Report. This summer, NAR surveyed 5,390 buyers who purchased a primary residence between July 2023 and June 2024.
In the 1980s, the typical first-time homebuyer was in their 20s.
“First-time homebuyers who are able to enter today’s market are older, have higher incomes and are wealthier,” said Jessica Lautz, deputy chief economist at NAR, noting that higher home prices require larger down payments.
Additionally, the share of first-time homebuyers on the market fell from 32% to 24% last year, the lowest level since NAR began collecting data in 1981.
factor including nationwide housing shortagecompete wealthy buyer Experts say high rents are making it harder for young people to buy their first home.
“Today’s Biggest Housing Issue”
Zillow senior economist Orphe Divounguy said the U.S. housing shortage is “the biggest housing issue today.”
According to NAR, the housing shortage will reach 4 million units by mid-2023. New home construction has been slow in recent years, with more buyers vying for available homes and pushing up prices.
“We do need affordable housing,” said Jonathan Scott, co-host of the HGTV series “Property Brothers.” “If we don’t start taking action now, this will impact us all.”
period Recent CNBC Your Money EventsScott said that in the long term, the ongoing housing shortage could significantly affect first-time buyers: “In another 20 years, virtually no young people will be able to afford to buy a home.”
Construction activity improved. Single-family housing construction starts In the United States, new housing starts increased to 1,027,000 units in September. according to U.S. Census data. An increase of 2.7% from August.
However, “we’re still in a very, very constrained market,” said Selma Hepp, chief economist at CoreLogic. “With fewer homes on the market, there’s more pressure on house prices.”
In August, a typical starter home cost $250,000, up from $240,000 a year ago. according to to Redfern.
“Winners in today’s real estate market”
The real estate market is dominated by repeat home buyers and sellers, or people who own and sell homes multiple times. Previous home ownership gave them Get Home Equity Digging, in some cases enough to purchase a home outright.
NAR found that about a quarter (26%) of home buyers purchased their homes with cash, an all-time high for cash buyers.
U.S. homeowners with mortgages have a net homeownership fair According to CoreLogic, this number will exceed $17.6 trillion by the second quarter of 2024. Home equity increased by $1.3 trillion in the second quarter of this year, an 8.0% annual increase.
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Baby boomers and retirees are “the winners in today’s real estate market,” Lautz said. According to the NAR report, the typical repeat homebuyer is now 61 years old, while the typical seller is 63.
“When we look at the average home buyer, older home buyers have about $300,000 in home equity, while younger millennial home buyers have about $300,000 in home equity,” Hupp said.
‘We’re seeing renters staying in their homes longer’
Other factors such as High rental costs and Debt-to-income ratio rises Experts say this makes it difficult for potential buyers to save for a home.
During the epidemic, rental prices have risen faster than tenant wages. 2022, Rental growth peaks Divounguy said the annual growth rate is 16%. In the same year, wages increased The peak value is 9.3%according to Indeed data.
Rising prices mean the typical renter spends about 31% of their income on rent. about half of tenant households are “Heavy cost burden” This means they spend more than 30% of their income on housing.
“We’re seeing renters staying in their homes longer because affordability is so squeezed,” he said.
High rents not only affect your ability to save for a home, but also your ability to pay off existing debt, Lautz said.
For example, if potential buyers have outstanding student loans, their monthly rent costs may make it harder for them to pay off more of their debt balance, she said.
This, in turn, affects your debt-to-income ratio, or the amount of debt you pay each month. This is an important factor when qualifying for a mortgage. Essentially, the lender consider DTI determines whether a borrower can maintain its mortgage payments based on its existing loan obligations.
“All of these things can snowball, especially in an inflationary environment,” Lautz said.
