Why did home buyers suddenly grow six years older in one year?
For nearly a decade, 39 has been the median age for home buyers. This year, the median age jumped to 45 years.
The sudden aging may be a one-year anomaly, the result of the rapid decline of first-time buyers who sank from 50 to 37 percent of all home buyers as the as a result of the expiration of the first time buyer tax credit last year. First-time buyers are considerably younger-31 years old on average-while repeat buyers average 53 years according to the 2011 National Association of Realtors’ Profile of Home Buyers and Sellers.
If the older age sticks, however, the ramifications for the housing market could be serious. As buyers delay their first purchase, they diminish demand for starter homes, which makes it more difficult for growing families in need of more space to sell and move into larger quarters.
Last year, for example, the typical first-time buyer purchased a 1,570 square foot home costing $155,000; the estimated median monthly mortgage principal and interest payment was $794. The typical repeat buyer was 53 years old and earned $96,600, notably higher than the $87,000 median reported in the 2010 profile. Repeat buyers purchased a median 2,100 square foot home costing $219,500, with an estimated median payment of $1,006.
A number of signs suggests that the home buying population has been aging.
Between the ages of 25 and 34 is prime time when many people form households with a spouse, partner, roommate, or by themselves, then start families and buy their first home. During and after the recession, household formation dropped for this age group, and more of them than ever are living with parents or other adults rather than renting or owning their own place. In the past three years, the rate has dropped from 1.7 million units per year to below 500,000 currently. These folks will wait to form their own households and consider homeownership only when their job prospects improve.
A key measure for housing demand and homeownership is the unemployment rate for this group and the share of this age group that is employed. As unemployment remains historically high – particularly youth unemployment, which in the United States is above 18 percent among 15- to 24- year-olds – a growing segment of the population is delaying its earliest ventures into the housing market. As more twenty-somethings remain in their parents’ homes or stay with roommates longer before heading out on their own, the bottoming household formation rate begins to anticipate pent-up demand for housing.
Last month, the unemployment rate for 25-34 year-olds rose to 9.8 percent from 9.7 percent in September and is at its highest level since December 2010. The unemployment rate for all adults, in contrast, fell from 9.1 percent to 9.0 percent. In October, 73.5 percent of 25-34 year-olds were employed, down from 73.7 percent in September and 73.9 percent in August. Before and during the boom, almost 80 percent of this age group was employed. The job market remains tough for this key age group: before the recession, unemployment for 25-34 year-olds followed the overall rate pretty much exactly, but has remained stubbornly above the all-adults rate even as the unemployment rate has drifted down slowly, according to Trulia Insights.
In regards to my eaelirr post on the prev topic I was using median household income. That is different than median family income. The info I have read when the mention the 3 times figure mentions 3 X HOUSEHOLD INCOME for affordability parameters. Household income includes singles and those living two or more while family income numbers only include those two or more in a household. So single folks living alone or a single head of household scenerio is not included in the family median income values. And I was mentioning Grand Forks city only not MSA. But indeed the census 2000 report had median household income for GF of 34,194 and 35,866 for EGF. Estimated values used on city-data.com and others use estimated median household incomoe for 2007 for GF as 40,587 and 41,574 for EGF. Those numbers should be used in affordability issue. I did see the latest HUD family adjustement median income for the GF MSA was 57,500 and the 60,100 was an estimate used for Fannie Mae and its program. I would like to know the source of the median home price sold. I know know on the MLS ther are 281 listings for single family/townhouse/condo in N Grand Forks and S Grand Forks middle of that (average) is listing 140 and it is at 159,900. Of median and average would be different but what homes sold for data is not on the web yet for the area.But my main point is .I recall looking at Crary built homes Jan 2003 period and a 1950 split level upper level finished only 2BR/1BA/2 car garage was offered for about 137,500 in EGF (a bit higher than that in GF). A ranch with top level finished and unfinished basement 1480 sq ft each level was around 150,000. Now in 06 a similar built house was listed for closer to 170,000-175,000 in EGF and it is hard to see why those prices increased so much as incomes did not increase that much. It is good to see that prices are being dropped some I have been noticing price reductions 5 to 10,000 via the MLS (yes I look at it too much!). I have have seen that on the street next to me (on 20th Ave SE) where newly built homes were lowered in price a bit. Now I havent any idea what they sold for as that is the key.I do feel for the folks out west but what person in the right mind would sell a 600,000 house to someone who makes 60,000 a year. No way can they afford that. No wonder out there in places like the Inland Empire and central valley of California foreclosures are huge. Thankfully the banks here never got involved in that sub prime loan stuff. I am currently re-financing a house loan and the lady at Gate City did say it is harder to get a loan now really good interest rates are reserved for those with credit scores of 720 and higher. It is important to realize that married couple or those living together if you both want to be on the documents as owners they will use credit scores of each person and use the lowest of the two to determine the rates.Enough on this just glad to see things settling back to earth a bit.