Short of cash and unsettled in their careers, young Americans are waiting longer than ever to buy their first homes.
The typical first-timer now rents for six years before buying a home, up from 2.6 years in the early 1970s. The median first-time buyer is age 33 — in the upper range of the millennial generation, which roughly spans ages 18 to 34. A generation ago, the median first-timer was about three years younger.
The delay reflects a trend that cuts to the heart of the financial challenges facing millennials: Renters are struggling to save for down payments. Increasingly, too, they're facing delays in some key landmarks of adulthood, from marriage and children to a stable career, according to industry and government reports.
These shifts help explain why homeownership, long a source of middle class identity and economic opportunity, has started to decline. The share of the U.S. population who own homes has slid to 63.4 percent, a 48-year low.
And when young adults do sign the deed, their purchase price is now substantially more, relative to their income, than it was decades ago. First-time buyers are paying a median price of $140,238, nearly 2.6 times their income.
Millennials are "still very interested in buying a house, but they're delaying that decision". Once they start having kids, they begin looking for homes. We're also finding that — given how much rental rates are currently rising — a lot of folks are having a hard time saving for a down payment and qualifying for a mortgage.
Few first-timers around the country can lean on their parents. Among homebuyers last year under age 34, 14% received down payment help from family or friends, according to a Federal Reserve survey.
Most first-timers still depend on personal savings for at least some of their down payments.
There is also a shift toward people who envision themselves renting for several years and therefore seeking the kinds of amenities more commonly associated with home ownership.
Job security has become a more central consideration for first-time buyers. Buyers had averaged nearly 4.5 years in their field of work and had held their current job for slightly more than three years. Those figures point to how critical career stability has become for a generation that entered the workforce during the Great Recession and its slow-growth recovery.
Housing industry experts note that surveys still show a strong desire to buy among millennials, but that their timelines for purchasing depend on achieving more stability in their careers.
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