Home ownership has been a significant part of the American Dream for decades. In the 20th century, most first-time home buyers were married couples in their 20s looking to begin a family. The changing lifestyle of today’s millennial generation has caused a major shift in this profile that you should be aware of.
According to data compiled by Zillow, today’s average first-time home buyer is 33 years old and single. Compare that to the late 1980s, when 52 percent of first-time home purchases were made by married couples. Dr. Svenja Guddell, chief economist at Zillow, says this is due to the tendency of millennials to delay life decisions such as getting married and starting a family.
These new home buyers are also renting for a longer period than their predecessors. In the 1970s, people bought their first home after renting for an average of only 2.6 years, whereas today that average has more than doubled to six years. Dr. Guddell attributes this partly to young adults moving frequently in search of career opportunities.
The good news for real estate professionals? While the median income of modern first-time buyers is $54,340, roughly equivalent to the same qualifier in the mid-70s, these individuals are committing a greater share of their income to purchase more expensive homes. The average in the mid-70s was 1.7 times average annual income, while some buyers today are spending as much as 2.6 times their income.
Exploding rent costs in many areas could motivate more millennials to consider home ownership as a more attractive option. With a tight housing inventory, especially in starter homes, the challenge will be finding one that fits their needs and wants.
Is your marketing aimed at capturing this new model of first-time home buyers? Let Properties Online help you make the most of this lucrative market.