It's taking Americans much longer in life to buy their first home
The typical age to buy a first home has jumped to 36 years old, the oldest ever on record. The rising age is a sign that high housing costs and mortgage rates are pushing homeownership out of reach for younger Americans.
In 2021, the typical first-time homebuyer was 33, according to 2022 data from the National Association of Realtors. Two years and one price surge, an inventory shortage and more than 10 Fed rate hikes later, that median age has gone up by three years, as the dream of home ownership becomes more distant for millennials.
"There's no getting around how tough buying a home can be in today's high-interest rates and high-price housing market," Jacob Channel, senior economist at LendingTree said Tuesday.
Baby boomers recently edged out millennials as the largest share of homebuyers. Boomers, ages 58 - 76, made up 39% of home buyers in 2022, compared with 28% for millennials, according to NAR data from March. That's an increase from 29% last year and the highest percentage of any generation.
"[Baby boomers] have built housing equity over their working lives, and they have been able to build wealth, and now they're buying their dream vacation home or their second home," Washington Post business reporter Julian Mark told CBS News. "They just have more money."
One economic downturn after another
Millennials, born between 1980 and 2000, have been dealt a far different set of circumstances. From the dot-com bubble burst in 2000 to the Great Recession of 2008 and, most recently, the coronavirus pandemic, millennials "have been hit with one recession after the next" since entering the workforce, Mark noted.
"Especially the Great Recession, was very hard on millennials for wage growth and that has essentially stunted their ability to meet major milestones like home ownership," he said.
With three major downturns in their rear view mirror, millennials now face a challenging housing market in which fewer homes are available for sale, asking prices are more expensive, and interest rates have climbed past 7.1%. The national median home price hit $402,600 in July, up from $359,000 at the start of 2023; the typical mortgage on a single-family home is now $2,051 compared with $1,837 a year ago, according to NAR.
Mortgage rates have jumped so much that some real estate agents have started advising their clients to buy the home and wait for interest rates to fall to refinance — described by the industry phrase "Marry the house, date the rate." That strategy may be "somewhat reasonable," Mark said,"but you have to be prepared to pay those interest rates perhaps forever because it's unclear when they will drop and by how much," he said.
Where's the hope?
"As tough as it may seem, those who want to buy, but can't afford to right now, should try to keep hope," Channel said.
But that's proving to be difficult. Roughly half of Americans who dream of owning a house one day worry they never will, a LendingTree survey found.
"Perhaps home ownership is not necessarily the fastest track to building wealth," suggested Mark.
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"Perhaps it is renting and using that money that you were planning to put on a downpayment — maybe just invest it into the stock market or the money market or any other safer investment that will have some type of steady yield instead of the theoretical appreciation of a home," he said.
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- Millennials
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Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
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