Gina Grover, consulting services specialist at Plus, uncovered this interesting article which informs us that there are fewer people buying a first home these days and that more of those making their first purchase are unmarried, Asian or Hispanic.
"It used to be that most young adults aspired to get married and buy a house, in that order," Gina explained. "But millennials facing steep financial barriers and a tough housing market have flipped the script on the American Dream. New homeowners aren’t much older than before, but today, more millennials are closing on their first homes before getting hitched and thus beginning the transition into a new household for them."
The changing attitudes of millennials isn't the only shift. A new paper from Harvard’s Joint Center for Housing Studies crunched the demographic data and found that the profile of first-time home buyers in the U.S. looks very different than it did 20 years ago:
- First-time home-buying rates for Asians surpassed whites
- A third of new homeowners today are unmarried
- First-time buyers are forming new households
To add to Gina's summary, with regard to that statement around financial barriers: While interest rates are more reasonable now than throughout most of history, according to Unison, nationally, the gap between income and home value has been rising. According to them, it took nine years to save up for a down payment in 1975, and now it takes 14 years on average across the U.S.
In many places, the number of years is almost insane. Home prices generally have continued to climb, and wages have been relatively stagnant. Add increasing personal debt (aka, student loans) and you get a challenging first-time home buyer scenario.
Based on the median home value, median household income and considering 5% annual savings, check out how many years it takes to save up for a down payment in these cities:
- San Francisco - 40 years
- NYC - 36 years
- San Diego - 31 years
- Seattle - 27 years
- Minneapolis - 17 years
- Los Angeles - 43 years
"While 72% of renters say they would like to buy a home in the future, 30% of millennials think they are more likely to win the lottery and 28% think that climbing Mount Everest is more realistic than owning a home."
Does that make you rethink what kinds of things people need when it comes to relocating?
There are fewer people buying a first-home these days, but of those entering the real estate market, more are unmarried, Asian, or Hispanic.