In the US, first-time homebuyers are, on average, 33 years old. The average age of homebuyers overall is 47. These numbers are drastically higher than when data taking first began in 1981. Here is what you should know about the shifting demographics of homeownership in the US.
What age group owns the most homes in the US?
Homeownership in the US has been on the decline with each succeeding generation. For instance, a recent study found that homeownership rates by generation between 1985-2020 broke down like this: 77.8% of both Baby Boomers and the Silent Generation, 69.1% of Generation X, and 47.9% of Millennials.
These numbers remain even though the Millennial generation surpassed Baby Boomers by population in 2019, according to the US Census Bureau. Millennials surpassed Generation X at 65 million people and Baby Boomers at 71 million. For real estate marketers, Millennials represent a major portion of the housing market, although they are being perceived as having less money than preceding generations.
The sheer number of Millennial homebuyers is perhaps why, over the past five years, that generation’s ownership rate has increased faster than their predecessors. This, however, is likely due to the stage that most Millennials find themselves in. In other words, there are simply more new first-time homeowners in their 30s than in their 60s. Overall, the typical age of all homebuyers in the US has risen to 47 in 2021 compared to 31 in 1981, according to the National Association of Realtors.
What are the characteristics of a homebuyer?
In the US, first-time homebuyers make up 34% of all homebuyers, which was an increase from 31% in 2021. Generationally, 81% of younger Millennials were first-time homebuyers compared to 48% of older Millennials. Twenty-two percent of Generation Xers were first-time homebuyers. However, older Millennials make up the biggest generation of homebuyers at 25% and a median age of 36. Generation Xers, with a median age of 49, are next at 22%.
In terms of household incomes, Generation Xers come in at the top with $125,000 in 2020. Older Millennials, meanwhile, have a median household income of $110,300. This remains true even though younger Millennials represent the most educated age group, with 84% having earned a bachelor’s degree at minimum. Older Millennials are the next most educated generation.
As for marital status, 60% of recent homebuyers were married couples, while 19% were single females, 9% were single males, and 9% were unmarried couples. The Silent Generation represented the highest percentage of single female homebuyers at 27%. For unmarried couples, younger Millennials had the highest share at 21%. Of all homebuyers, 31% have at least a child under 18 living at home; for older Millennials, that number jumps to 59%.
Are first-time homebuyers getting older?
First-time homebuyers are getting older due to several factors. A couple of these factors are that home prices continue to rise, and student debt continues to add to the problem. The typical age of first-time homebuyers is now 33 years old, according to a recent National Association of Realtors survey. That age is the oldest since data was first recorded in 1981. As mentioned, the median age of all homebuyers also recently reached a new high of 47 years old, which has increased more and more over the past three years running. (The typical age in 1981? Thirty-one years old.)
A scarcity in houses across the US—and in affordable housing in particular—has exacerbated the issue. Decreased mortgage rates have also made house prices out of reach for many, especially in cities along the coasts. This has forced a migration of homebuyers into the middle of the country. Debts, including student debts, have also made it difficult for younger generations to save up for costly down payments, with tightening rules around lending making bank loans even harder to obtain for applicants with imperfect credit. The age of repeat buyers has also increased dramatically since data collection began in 1981, with the typical age rising from 36 then to 55 now.
Most common reasons why homebuyers are purchasing a home
One common reason why homebuyers are purchasing homes is for investment and to earn a passive income. Purchasing property has become an increasingly popular way to create wealth, usually buying rental properties to generate cashflow. The value of rental income has increased due in part to low interest rates.
Because of its investment potential, buying a home makes sense if several factors weigh in your favour including owing little or no debt, having a good credit score, having a solid, reliable and well-paying job, and having established an emergency fund.
As a seasoned real estate expert with a wealth of knowledge and a demonstrated understanding of the housing market, I can delve into the intricacies of the shifting demographics of homeownership in the United States, drawing on extensive experience in the field.
Firstly, let's address the data presented in the article. The average age of first-time homebuyers in the US is now 33 years old, a significant increase from the typical age of 31 recorded in 1981. This shift is noteworthy, and it reflects broader trends in the housing market. Meanwhile, the overall average age of homebuyers has risen to 47 in 2021 compared to 31 in 1981, according to the National Association of Realtors.
Examining generational patterns, the article highlights a decline in homeownership rates with each successive generation. Notably, the study spanning from 1985 to 2020 reveals that 77.8% of both Baby Boomers and the Silent Generation were homeowners, compared to 69.1% of Generation X and 47.9% of Millennials. Despite Millennials surpassing Baby Boomers in population in 2019, their homeownership rates remain lower.
The Millennial generation, despite being perceived as having less financial capacity, is a significant force in the housing market. Over the past five years, their homeownership rate has increased faster than their predecessors, driven in part by the sheer number of new first-time homeowners in their 30s.
Furthermore, the characteristics of homebuyers are crucial to understanding the dynamics at play. First-time homebuyers constitute 34% of all homebuyers in the US, with a notable increase from 31% in 2021. Younger Millennials, with an 81% share, lead the pack in first-time homebuyers compared to older Millennials at 48% and Generation X at 22%. In terms of household incomes, Generation Xers have the highest median income at $125,000 in 2020, followed by older Millennials at $110,300.
Marital status plays a role in homebuying trends, with 60% of recent homebuyers being married couples. Single females make up 19%, single males 9%, and unmarried couples 9%. The Silent Generation stands out with the highest percentage of single female homebuyers at 27%, while younger Millennials lead in unmarried couples at 21%. Additionally, 31% of all homebuyers have at least one child under 18 living at home, rising to 59% for older Millennials.
The article also sheds light on the age of first-time homebuyers, attributing the increase to rising home prices, mounting student debt, and a scarcity of affordable housing. The median age of first-time homebuyers is now 33, the highest since data collection began in 1981.
Finally, the article touches on reasons why homebuyers are entering the market. Investment and earning passive income, particularly through rental properties, have become common motivations. Low interest rates have contributed to the appeal of purchasing property for wealth creation.
In conclusion, the evolving landscape of homeownership in the US is shaped by various factors, including generational trends, economic conditions, and changing demographics, all of which are essential considerations for both real estate professionals and prospective homebuyers.
