:max_bytes(150000):strip_icc()/GettyImages-1820110716-dbf3b7cd97da434f9e080e4055e6290f.jpg "The Average Homebuyer is 56 Years Old This Year, The Oldest They’ve Ever Been")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1820110716-dbf3b7cd97da434f9e080e4055e6290f.jpg)
KEY TAKEAWAYS
- Younger homebuyers find it harder to break into the housing market as they face higher costs and limited inventory.
- This year, the average age of home buyers increased to a record high as first-time homebuyers in particular struggle to afford housing costs.
- The housing market has consistently darkened economic reports as mortgage rates remain high and homeowners still hesitate to trade in their ultra-low rates.
Young homebuyers are entering the housing market at a record low as high mortgage rates and prices have made home buying unaffordable for many.
According to a recent report by the National Association of Realtors, the average age of homebuyers rose to 56 this year. This is seven years older than last year and the highest level since the NAR started tracking in 1981.
While the overall economy has been running smoothly, the housing market remains a dark cloud, especially for younger and first-time homebuyers.
First-Time Buyers Find It Harder To Break Into The Housing Market
The average age of first-time buyers increased to 38 from 35, and the percentage of people buying homes for the first time fell to a historic low of 24% from 32% last year.
“First-time buyers face high home prices, high mortgage interest rates and limited inventory, making them a decade older with significantly higher incomes than previous generations of buyers,” Jessica Lautz, NAR deputy chief economist and vice president of research, said in the press release.
Traditional financial advice says housing costs should not exceed 30% of a worker’s income. However, they hovered close to 42% in August, according to a housing affordability monitor created by the Federal Reserve Bank of Atlanta.
High mortgage rates have made it harder for home buyers’ wallets. Rates have increased significantly from record lows during the pandemic. Currently, the average rate for a 30-year mortgage is 6.72%, much higher than the record low of 2.65% in January 2021, according to Freddie Mac.
The sudden rise in mortgage rates locked up the housing market. Prices increased as homeowners were hesitant to sell their homes and give up their ultra-low rates for the higher rates offered now.
Moving forward, there is uncertainty hanging over mortgage rates, wrote Realtor.com Senior Economist Ralph McLaughlin last week.
“The trajectory of rates over the coming months will be largely dependent on three key factors: (1) the performance of the labor market, (2) the outcome of the presidential election, and (3) any possible reemergence of inflationary pressure,” McLaughlin wrote. “While volatility has been the theme of mortgage rates over the past several months, we expect stability to reemerge toward the end of November and into early December.”