What Just Happened? Today’s Typical Buyer Aged More Than Six Years Since Last Year!

Congrats to all of you who, in middle life, are acquiring a deed to a home. It’s a major achievement. Chances are, you worked intensely to pull it off.

And you’re not alone. A new publication from the National Association of REALTORS® says the average buyer out there is now 56 years old. That’s up from 49 in July 2023.

Yes, check that again. The average age of homebuyers in the U.S. has risen by six and a half years from last summer to this summer.

One standout success involved the female solo deed holders… Wow!

Let’s break it down.  

Yes, We Know: Young Buyers Face “Wildly Unaffordable” Real Estate

Given the stats above, we know that buyers are older than ever. Older than they ever were throughout the known history of U.S. housing.

It was 1981 when the National Association of REALTORS® started keeping track of the metrics. The median buyer was a 29-year-old then. At that age, some buyers had already acquired a prior home. Themedian age of first-time buyers today is 38. Just think about it a minute, putting aside current home prices and mortgage interest. That’s the reality of what’s unfolded in the United States in just four decades.

OK, can we guess why? Of course we can. It’s what Noah Damsky of Marina Wealth Advisors said. As Damsky put the point for CNBC.com: “Homebuying for the younger generation is wildly unaffordable.”

The median U.S. home price is up nearly 40% in just four years to $435K, as NAR reports. And as those prices soared, so did the interest payments that new buyers have been forking over to banks.

Lenders sizing up potential buyers are laser focused on whether the applicants can safely keep their deeds as well as acquire them. Loan underwriters want to know:

• How much debt (including student loan debt) does this person already have to pay off?

• With monthly rents at the high level they’re at today, did this applicant manage to save enough to keep emergency funds in reserve?

• Younger people often earn less (inflation-adjusted) income than people of earlier generations did. Does this applicant have enough money to afford a reasonably substantial down payment?

• If prices are being bid up in this area, will this applicant realistically need a bigger loan to compete?

Say the buyer hopes to avoid private mortgage insurance. So the hopeful buyers shoots for putting 20% down on a modestly priced home. If the price is $300,000, that’s $60K down. A lot of first-time home buyers don’t make that much in a year.

Even if they can come up with that, they’ll be competing with other buyers out there who already have years of built-up equity and don’t hesitate to wield that power. NAR notes that a typical seller bought their home ten years ago. Given the rise in property values over this past decade, that’s a heap of equity-building!

Well, then, no wonder the older home seekers have an edge. And no wonder it’s so hard to “get to yes” with a mortgage company these days if you’re in the younger age brackets.

More and more people in younger generations are pooling their resources to buy homes. These co-owners are known (on their deeds) as tenants in common.

Running the Numbers: How the Needles Moved

Here are some more facts coming out of the National Association of REALTORS® take on the state of the market, just released in late 2024:

• First-timers stalled out. They weren’t even as much as a fourth of the market. A year earlier, they were nearly a third of all buyers!

• First-timers clearly needed a hand to get through the journey. One in every four first-time buyers borrowed from, or received gifted money from, someone else. They then put that kind assistance to work in their down payment​s.

• And female solo deed holders, wow! You now represent a quarter of the buyer population. That’s a major rise. Single women made up less than a fifth of buyers last year.

• As for the sellers, 90% listed with agents. Those with agents came out of their deals significantly better, profit-wise. We know NAR was happy with that.

As for the single women, this stat includes buyers of all ages. Of course, those with the highest earnings and those with their own homes to sell are the frontrunners.  

Sellers Flex, Big Time.

Sellers keep getting older, and you can guess one big reason. They’ve been sitting on their homes, in no hurry to give up those delicious, low-interest mortgages many of them got a few years ago.

What else does NAR say about the sellers in the 2024 report? The typical seller is a repeat seller. And they’re older than they ever were, since NAR began keeping track. Today’s typical seller is 63.

Now, stop and look back to 2007. That year, the typical seller was only 45. So the rise in seller ages indeed marks a major shift. And with age, as you know, comes the strength of having more in terms of assets. And that leads us to another notable shift. The money today’s sellers haul away from their closing tables.

With the supply at such a low level, today’s home sellers enjoy outsized power. They aren’t making many concessions. Most, anyway. Three-fourths offered no incentives at all.  

‘Tis the season for home sellers who flex their collective muscle in the market. (Maybe for homes that sit on the market more than a month, the stats show the seller’s Kryptonite evaporating, right? But wait. Homes that stayed on the market for five to eight weeks still sold for 98% of the seller’s asking price!)

As expected, seniors are selling because they finally want to downsize, or they need to be closer to their loved ones.

Some of them just want to live in different areas. Pretty typical stuff, historically. No shift in reasons for moving during the year from summer 2023 to this year.

It’s Not You. It’s Harder Than Ever for Young People to Buy Homes.

If you manage it, you’re one of the lucky (or older) ones! But we know it takes much more than luck.

The buying environment is harsh. Buyers are out there trying to catch a break, while sellers are like “Give us all your money!” Sellers are mainly fetching their full asking prices — that’s more of them than any time in more than a decade.

And now, a lot of young folks are turning into old folks while they work to get their deeds.