The National Association of Realtors reports a bigger share of older first-time home buyers in 2022, while first-time residence purchases fell to their lowest level since records began.
According to NAR’s annual Profile of Home Buyers and Sellers, first-time home buyers accounted for just 26% of the housing market between July 2021 and June 2022, down from 34% the year before and a record of 50% in 2010.
"It's not surprising… given the housing market's combination of historically low inventory, persistently high home prices and rapidly escalating interest rates," says Jessica Lautz, NAR vice president of demographics and behavioral insights.
With more advanced careers, older first-time home buyers are less likely to face the affordability challenges of younger buyers, as they’ve had more time to save for a down payment, closing costs and other homeownership expenses. As a result, the age of the typical first-time buyer rose to an all-time high of 36, compared to 33 in 2021. The typical repeat buyer is now 59 years old versus 56 last year. And they’re also moving further to find their new homes, and settling in small towns and rural areas in greater numbers – suggesting that they’re following the old advice to “drive until you qualify”.
In response to these trends, house prices are falling because demand for homes is falling, with many demographics feeling excluded from the high-priced housing market. But as the market begins to correct itself, demand could rise again, which could put a strain on rental income as tenants who put off homeownership are presented with new affordable options.
There’s still some good news for property managers – rents rarely ‘crash’ the same way home prices do. Even if housing prices bottom out, rents will likely plod along the same steady path. There’s even opportunity in a correction to buy properties at a discount, either to sell or convert into rental units.
In the meantime, because young people can’t afford sky-high home prices or mortgage rates, they’re likely to stay in their rental properties for longer, meaning less tenant turnover. And since nearly 90% of home buyers and sellers used an agent, property management firms with brokerages can still bolster business with commission.
More homeownership headlines
Gen Z doesn't think they'll buy a house, work second jobs, live at home – Business Insider
Mortgage rates are high because nobody is buying mortgages – The Wall Street Journal