Homeownership is a giant a part of the American dream. For a lot of hopeful buyers, that dream is coming true much later in life than expected.
In response to a recent report from National Association of Realtors, the median age of homebuyers is 56, a seven-year jump from 2023 and a record high within the 43 years the NAR has been tracking this figure. Repeat buyers have a median age of 61, up from 58. First-time buyers are older, too: The median age rose to 38 from 35 last 12 months.
That homebuyers are older today probably won’t surprise anyone who’s been home-shopping in recent times. Mortgage rates jumped from around 3% to over 7% within the last two years and are currently hovering within the high 6% range — not high by historical standards, but significantly higher than the record lows of 2021. Home prices increased and proceed to rise in most cities across the country.
These two aspects have led to a lack of affordability that has kept younger and first-time homebuyers specifically out of the market, Jessica Lautz, deputy chief economist and vp of research at NAR, wrote in a news release.
“First-time buyers face high home prices, high mortgage rates of interest and limited inventory,” she wrote. The story is different for individuals who already own homes, she added, because they’ll use the equity built up of their current homes. Depending on their housing needs, that equity lets them either make a down payment on a dearer home or downsize to something cheaper and buy outright with money.
The aging of the American homebuyer
While the recent trend of older homebuyers may appear to have developed in the course of the pandemic and its aftermath, it’s actually a long-term, secular trajectory that has been happening for many years. The NAR data shows a gradual rise, with occasional dips, in homebuyer age since 1981 (see chart below).
Not all of those increases could be attributed to high home prices and mortgage rates. Will Begeny, vp of selling at Tomo Mortgage, says there are several socioeconomic the explanation why individuals are laying aside homeownership until later in life.
“Persons are getting married later… getting educated longer, starting their careers later,” Begeny says. Over the past 4 many years, Americans have increasingly prioritized these other goals over owning a house.
While these secular aspects have contributed to the rising age of homebuyers for greater than a generation, the high cost of entry into today’s housing market is forcing people to attend even longer. Homes themselves are dearer, and shutting costs and lender fees are higher. Higher mortgage rates pushed many would-be buyers to their breaking point: In response to the NAR, 2023 was the slowest 12 months for home sales in almost 30 years, and 2024 is on an identical pace up to now.
A scarcity of entry-level starter homes, that are typically cheaper, also complicates the scenario and causes people to postpone becoming homebuyers. In response to a survey of adults aged 40 and younger conducted by Chase late last 12 months, 77% named the limited amount of inventory inside their price range in the world where they desired to buy as a significant home-buying roadblock.
One big reason there are so few homes in the marketplace is that current owners aren’t “trading up” as often as they were before the pandemic, as a substitute selecting to remain and expand or renovate their current homes. The mix of upper rates of interest and dearer homes makes moving a financial impossibility for a lot of families, especially those living within the priciest metro areas.
Older Americans also aren’t downsizing as much. Despite the fact that smaller homes is likely to be more “reasonably priced” by way of purchase price, these homeowners could find themselves making dearer monthly payments due to today’s high rates of interest. With Baby Boomers staying put, there are fewer larger homes available for young families with kids. The costs of homes that do hit the market reflect that scarcity.
All of those aspects make it incredibly difficult for a buyer who hasn’t built up equity from a previously purchased home to assist cover the expenses.
“It’s taking younger buyers longer to avoid wasting up for the upfront costs of a house purchase,” says Max Koziol, national purchasing director at Chase Home Lending. With so many younger adults stuck on the sidelines, the typical age of buyers rises.
Despite the challenges facing today’s would-be buyers, data from each Chase and Tomo show that Americans still wish to buy homes. The underlying problems constraining younger buyers will take time to resolve, suggesting that the age of homebuyers will proceed to rise within the near future.
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