Young First-time Buyers Disappearing From Housing Market

by | Jul 26, 2014 | Blog, First Time Buyer tips, Selling a Home

First Time Buyer tipsIt used to be that after graduating college, young people would begin saving for their first home. Not long after that, they would enter the home market in force. These days, though, industry observers are wondering where all those first-time buyers are hiding.

According to U.S. Census data, the rate of home ownership for young people has declined from 43.6% in the last decade to a little over 36% today. In a recent National Public Radio interview, NPR senior editor Marilyn Geewax spoke about the trend, noting that 3 million young adults are now missing from the market.

The reasons appear to be multi-faceted. One large factor is college debt. Seven out of 10 students leave college with debt that averages $33,000 per person. “So…even after you adjust for inflation,” said Geewax, “that’s twice what it was 20 years ago.” In the ‘90s, graduates could pay off that debt in approximately five years and start saving for a home. “But now, they’re well into their 30s before they can even start to feel their way out of that pile of debt.”

To make matters worse, the Great Recession has made young people wary of job security. They realize that they might have to move across the country at some point to improve their job status. As a result, they’re cautious about putting down roots.

Meanwhile, the median price nationally for a new home is $290,000 —“the highest ever recorded,” said Geewax. Even when young people are making good salaries, this puts home ownership out of reach for many.

All of this translates into worry for long-term stability of the real estate market. “You need to have…the chain moving along, the kind of conveyer belt where somebody who’s 29 buys a small home, and then they move to the nicer one,” explained Geewax. Elderly sellers at the end of the chain can then bank some money for retirement. “If you break down this chain, it can affect every generation.”

Although those who have already purchased a home might feel secure and unconcerned about the next generation’s problems, no one wlll be unaffected by this trend, said Geewax. “We all have a stake in how younger people are doing.”

Get more tips on selling your home at RE/MAX of Cherry Creek’s blog.

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