Average age of homebuyers in US jumps to 56, as experts say homes are ‘wildly unaffordable’ for young people
We already know that people over 50 dominate the Real Estate market, and that younger generations are finding it increasingly difficult to buy a home. Now comes further proof from the annual study of the National Association of Realtors.
As reported here, the study found that the average age of homebuyers is now 56. That’s a historic high. In the early 2010s, the average age was in the low- to mid-40s, and it was 49 just a year ago.
As well, the percentage of home buyers who are first-timers dropped to the lowest level since NAR began tracking this statistic, all the way back in 1981. It’s now just 24%.
The article quotes Bob Driscoll, senior vice president and director of residential lending at Rockland Trust: “In my two decades in the mortgage business, I’ve never seen a more difficult time for Millennials to purchase a home.”
Echoes Noah Damsky, a chartered financial analyst at Marina Wealth Advisors: “Homebuying for the younger generation is wildly unaffordable.”
The numbers tell the tale: “An 18% down payment — the median percentage buyers put down, according to NAR — on a $435,000 home comes to $78,300. That’s a significant expense, nearly matching the annual U.S. median household income of $80,610, per U.S. Census Bureau data.
“Younger buyers who can afford down payments are still often outbid by older, wealthier buyers using equity from homes they already own.
“Younger buyers are also competing with wealthier all-cash buyers, whose share of home purchases has increased from 20% to 26% in the past year, the study says.”
What’s particularly interesting, in the SuperAging context, is that “a quarter of first-time buyers have relied on a gift or loan from a relative or friend to afford a down payment.” Often this is a SuperAging parent or grandparent.
Complicating things further, as we’ve reported before, is that Baby Boomers (the largest chunk of SuperAgers) are not necessarily selling out of their homes in order to downsize. The assumption that they would do so, is a key part of the now-obsolete Default Aging model: you turn 65, you retire, you’re an empty-nester by now so you sell that home that is no longer manageable, and that home now enters the inventory that can be purchased by the younger generations. But what happens if you stay put?
There’s clearly an imbalance between the wealth and financial staying power of many SuperAgers and that of their children and grandchildren. It’s a topic we’re watching closely.
Related articles on SuperAgingNews.com
Is Boomer money quietly fueling the consumer economy?
Trend: Parents financially supporting adult children
Older Americans are staying in their homes for twice as long as in 2005
Retirement strategy of downsizing may no longer make as much financial sense
