More first time buyers and single women are buying homes in the United States with a robust jobs market helping them back to home ownership, new research reveals.
Over the long term first time buyers make up around 40% of the market, according to the National Association of Realtors, but this fell to a 30 year low of 32% in 2015. But the latest home buyer and seller profile survey shows that after falling for three years in a row the number of people buying their first home has reached 35% in 2016, the highest since 2013.
Lawrence Yun, NAR chief economist, said that more new home owners were able to break through what continues to be a laborious market for many trying to enter. ‘Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the recession,’ he said.
‘Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise,’ he explained, adding that these factors were why 67% of first time buyers said a desire to own a home of their own was the primary reason for their purchase, up from 64% in 2015 and 53% in 2014.
‘Even with the affordability challenges many buyers face, the allure of home ownership is not lost among the younger generation. Those under age 35 made up 61% of first time buyer transactions,’ Yun pointed out.
But he also pointed out that although the increase in new home owners is encouraging, their overall share of the market is still subpar as a lack of affordable new and existing inventory, home prices in many markets rising far above wages and difficulty saving for a down payment because of rising rents and student debt means that the home ownership rate for 18 to 35 year olds is currently hovering near its historical low.
‘First timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,’ added Yun.
While married couples once again made up the largest share of buyers at 66% and had the highest income at $99,200. However, the survey revealed that single women buyers are higher in 2016 than in recent years. After falling to 15% of buyers a year ago, the lowest share since 2002, single females represented 17% of total sales, the highest since 2011 when it was 18%.
Yun pointed out that despite having a much lower income at $55,300 than single male buyers at $69,600, female buyers made up over double the amount of single men. ‘Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women,’ he explained.
The research also shows that the median age of first time buyers was 32, matching the all-time high of 2006 and up from 31% over the last five years. The typical first time buyer had a higher household income at $72,000 than last year when it was $69,400 and purchased a slightly larger home at 1,650 square feet compared to 1,620 square feet in 2015, and a home that was more expensive at $182,500 compared to $170,000 in 2015.
The typical repeat buyer was 52 years old, a year younger than in 2015, earned $98,000 compared to $98,700 in 2015 and purchased a 2,000 square foot home, around the same as the 2,020 square feet in 2015, paying slightly more at $250,000 compared to $246,400 in 2015.
