The typical age to buy a first home has jumped to 36 years old, the oldest ever for first-time homebuyers and a sign that high housing costs and mortgage rates are pushing homeownership out of reach for younger Americans.
In 2021, the typical first-time homebuyer was 33, according to 2022 data from the National Association of Realtors.
“There’s no getting around how tough buying a home can be in today’s high-interest rates and high-price housing market,” Jacob Channel, senior economist at LendingTree said Tuesday.
Baby boomers recently edged out millennials as the largest share of homebuyers, according to NAR data. There are several reasons why it’s taking longer for millennials, who were born between 1980 and 2000, to buy property, Washington Post business reporter Julian Mark told CBS News. Part of it is, but the main issue is much bigger, he said.
One economic downturn after another
Millennials have spent their working years going through the dot-com bubble burst in 2000, the Great Recession of 2008 and, most recently, the coronavirus pandemic, Mark said. Those economic events have depressed millennials’ wage growth and “essentially stunted their ability to hit major milestones like homeownership,” he added.
With those downturns in their rear view mirror, millennials now face a challenging housing market in which fewer homes are available for sale,and asking prices are more expensive. The national median home price hit $402,600 in July — up from $359,000 at the start of 2023; the typical mortgage on a single-family home is now $2,051 compared to $1,837 a year ago, according to NAR.
Mortgage rates have jumped so much that some real estate agents have started advising their clients to buy the home and wait for interest rates to fall to refinance — a phrase the industry calls “Marry the House, Date the Rate.” That strategy may work “but you have to be prepared to pay those interest rates perhaps forever because it’s unclear when they will drop and by how much,” Mark said.
“Try to keep hope”
“As tough as it may seem, those who want to buy, but can’t afford to right now, should try to keep hope,” Channel said.
But that’s proving to be difficult. Roughly half of Americans who dream of owning a house one day worry they never will, a LendingTree survey found.
Even though millennials make up the largest population in the U.S., more baby boomers are buying homes these days, according to NAR data from March. Baby boomers made up 39% of homebuyers in 2022, compared with 28% by millennials.
Many baby boomers are able to own more homes because that generation bought property decades ago while it was cheaper, thus building more home equity, Mark said. According to NAR, baby boomers are purchasing new homes for a number of reasons, most revolving around retirement and the desire to be closer to friends and family or downsize to a smaller home, now that their kids have flown the coop.