SEATTLE, April 30, 2019 /PRNewswire/ -- Nearly 45
million people in the U.S. will reach the typical age for
first-time home buyers in the next 10 years – 3.1 million more than
the past decade – creating more demand in an already challenging
market for those looking to get into their first home.
The typical first-time home buyer in the U.S. is 34 years
oldi. There are 44.9 million Americans aged 24-33, or
potential future first-time home buyers, compared with 41.8 million
people aged 35-44, or potential past first-time home buyers, a 7.4%
increase.
For the past several years, the housing market has been
characterized by shrinking inventory and higher prices,
particularly in the least expensive third of homes – the homes most
likely to be targeted by first-time home buyers. These starter
homes have gained 57.3% in value over the past five years, a median
increase of $47,600, while for-sale
inventory in this price range has fallen by 23.2%. Over the same
time period, the most expensive third of homes gained 26% in value
and homes in the middle third appreciated 36.8%.
Though the current housing market is softening, this coming wave
of buyers sets up for a future starter-home market with
now-familiar dynamics: relatively high demand and low supply, in
which the stiff competition among buyers exacerbates the
affordability issues caused by rising prices.
"The potential first-time buyer bulge, without inventory to meet
it, suggests that the typical age of first-time buyers will
continue to be pushed further and further out. The rate of
single-family construction is still behind the pace we experienced
in the 1990s, and without an increase in truly new supply, would-be
first-time buyers will instead persist in the rental market," said
Skylar Olsen, director of economic
research at Zillow®. "Buyers making the transition from renting to
homeownership helps ease rental demand, which limits rent-price
growth. If this coming wave of buyers have to compete fiercely for
homes to purchase, that could drive up rent prices as well as home
values."
The growth in potential future first-time home buyers is more
extreme in some markets, including San
Diego and Boston, already
among the 10 least affordable large housing markets. Both metros
will see a nearly 20% increase in the next wave of potential
first-time home buyers compared to the previous wave.
First-time buyers are facing difficulties saving for a down
payment – a recent Zillow analysis found that buyers need 1.5 years
longer to save for a down payment than they did 30 years ago – and
securing a loan. Nearly four times as many first-time buyers who
obtained a mortgage last year were denied at least once (29%)
compared to repeat buyers (8%)ii.
Some markets provide better conditions for first-time buyers
with a combination of lower home values, strong appreciation
forecasts, available supply and a high share of listings with a
price cut. The three best markets for first-time home buyers in the
2019 home shopping season are Tampa, Las
Vegas and Phoenix.
Metropolitan
Area
|
Median First-
Time Buyer Age
|
Decade Below
Median First-Time
Buyer Age (Coming
Wave of Buyers)
|
Decade Above
Median First-Time
Buyer Age (Past
Wave of Buyers)
|
%
Difference
|
United
States
|
34
|
44,912,852
|
41,800,135
|
7.4%
|
New York,
NY
|
34
|
2,988,970
|
2,702,278
|
10.6%
|
Los Angeles-Long
Beach-Anaheim, CA
|
33
|
2,083,102
|
1,855,932
|
12.2%
|
Chicago,
IL
|
34
|
1,356,832
|
1,278,547
|
6.1%
|
Dallas-Fort Worth,
TX
|
36
|
1,069,525
|
1,037,474
|
3.1%
|
Philadelphia,
PA
|
34
|
862,262
|
758,675
|
13.7%
|
Houston,
TX
|
36
|
1,025,962
|
967,241
|
6.1%
|
Washington,
DC
|
34
|
903,648
|
918,075
|
-1.6%
|
Miami-Fort
Lauderdale, FL
|
36
|
823,676
|
808,936
|
1.8%
|
Atlanta,
GA
|
37
|
819,210
|
834,845
|
-1.9%
|
Boston, MA
|
34
|
735,518
|
615,700
|
19.5%
|
San Francisco,
CA
|
37
|
773,266
|
676,036
|
14.4%
|
Detroit,
MI
|
34
|
573,352
|
501,890
|
14.2%
|
Riverside,
CA
|
33
|
676,025
|
606,991
|
11.4%
|
Phoenix,
AZ
|
34.5
|
674,284
|
623,484
|
8.1%
|
Seattle,
WA
|
33
|
605,528
|
593,164
|
2.1%
|
Minneapolis-St
Paul,
MN
|
34
|
531,087
|
503,535
|
5.5%
|
San Diego,
CA
|
33
|
552,573
|
462,898
|
19.4%
|
St. Louis,
MO
|
34
|
383,352
|
357,516
|
7.2%
|
Tampa, FL
|
36
|
408,792
|
378,672
|
8.0%
|
Baltimore,
MD
|
36
|
401,927
|
347,037
|
15.8%
|
Denver, CO
|
33
|
456,433
|
448,321
|
1.8%
|
Pittsburgh,
PA
|
34
|
299,959
|
267,904
|
12.0%
|
Portland,
OR
|
33
|
351,378
|
368,658
|
-4.7%
|
Charlotte,
NC
|
36
|
352,881
|
358,029
|
-1.4%
|
Sacramento,
CA
|
33
|
322,113
|
307,627
|
4.7%
|
San Antonio,
TX
|
36
|
364,893
|
319,435
|
14.2%
|
Orlando,
FL
|
36
|
369,289
|
335,088
|
10.2%
|
Cincinnati,
OH
|
34
|
292,684
|
262,167
|
11.6%
|
Cleveland,
OH
|
34
|
270,623
|
237,886
|
13.8%
|
Kansas City,
MO
|
34
|
298,043
|
290,512
|
2.6%
|
Las Vegas,
NV
|
33
|
320,458
|
310,044
|
3.4%
|
Columbus,
OH
|
34
|
315,886
|
272,735
|
15.8%
|
Indianapolis,
IN
|
34
|
286,556
|
270,426
|
6.0%
|
San Jose,
CA
|
33
|
297,492
|
288,751
|
3.0%
|
Austin, TX
|
36
|
368,926
|
323,562
|
14.0%
|
Zillow
Zillow is the leading real estate and rental
marketplace dedicated to empowering consumers with data,
inspiration and knowledge around the place they call home, and
connecting them with great real estate professionals. In addition,
Zillow operates an industry-leading economics and analytics bureau
led by Zillow Group's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of
economists, data analysts, applied scientists and engineers produce
extensive housing data and research covering more than 450 markets
at Zillow Real Estate Research. Zillow also sponsors the quarterly
Zillow Home Price Expectations Survey, which asks more than 100
leading economists, real estate experts and investment and market
strategists to predict the path of the Zillow Home Value Index over
the next five years. Launched in 2006, Zillow is owned and operated
by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in
Seattle.
Zillow is a registered trademark of Zillow, Inc.
i
https://www.zillow.com/report/2018/buyers/the-typical-american-home-buyer/
ii
https://www.zillow.com/report/2018/highlights/the-challenge-of-buying-for-the-first-time/
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SOURCE Zillow