There’s a new wrinkle in the housing affordability crisis: American homebuyers are now older than ever.
High prices — and just-as-high mortgage rates — are combining to “push homeownership out of reach for many,” said Axios. A new report from the National Association of Realtors (NAR) reveals that the median age for first-time homebuyers is now 38. That’s up from 35 last year, and a “new high in data going back to 1981.” First-time buyers make up just 24% of the market now, a “record low,” said Axios. “Becoming a homeowner has never felt harder.”
The average age of all homebuyers — first-timers and repeaters — has “risen by six years since July 2023,” Mike Winters said at CNBC. That average age is now 56, up from 49 last year. A quarter of first-time buyers now need a gift or a loan from a family member or friend in order to make a down payment. “In my two decades in the mortgage business, I’ve never seen a more difficult time for millennials to purchase a home,” said Bob Driscoll, director of residential lending at Rockland Trust in Massachusetts.
First-time buyers ‘frequently sidelined’
“Buyers are needing a higher income to be able to get into homeownership,” Brandi Snowden, director of member and consumer survey research at NAR, said to Realtor.com. The median selling price of a home is $435,000, and buyers who successfully close on a home have a median income of $108,800, up $1,800 from last year. Nearly a quarter of first-time buyers reported living with friends or family prior to the purchase, allowing them to “save for a longer amount of time,” Snowden said.
The shortage of young people buying homes “helps explain the housing market’s continuing slump,” Shaina Mishkin said at Barron’s. It also offers a reason for why homebuilders are struggling “despite the long-term need for new homes.” As prices rise, potential first-time buyers are “frequently sidelined by other costs” like student loans and rent as they attempt to come up with the growing pile of money needed for a down payment. The typical down payment for first-timers is now 9% — “the highest since 1997,” Mishkin said.
Affordability affects presidential vote
There are political consequences to these changes. Thirty-eight percent of early voters in the presidential election reported that housing affordability “influenced their pick for president,” said HousingWire. A third of respondents to an Ipsos survey said they believed mortgage rates would fall in a Kamala Harris presidency, while a quarter said the same about Donald Trump. But many of the policies that affect affordability are enacted at the local level. That’s why “housing affordability could play a larger role in local elections,” said HousingWire.
Not so long ago a “typical first-time homebuyer was in their late 20s,” said CNN. That’s no longer the case. The Americans who can enter the housing market these days, said NAR deputy chief economist Jessica Lautz, are “really a select few.”