The traditional look of first-time homebuyers is changing
The traditional notion of a couple or a family buying a first home is starting to look a little different.
In 2021, plenty of first-time homebuyers are individuals. Sometimes, it’s the only way to go. Young people want to be homeowners, but it’s such a competitive marketplace that they need to get creative and go a more non-traditional route to make it happen.
It’s more commonplace today that couples find themselves in a situation where one has the finances and the credit to buy a home but the other does not. With it being more and more difficult to buy a home when the demand is so high and the supply is at an all-time low, finding a way through the competitive noise, even if it’s a non-traditional approach, can give a buyer a leg up.
Millennials, and yes, even some Generation Z homebuyers have to find something to start turning the homeownership trends around. In 2020, the average age of a homebuyer was 47 years old. This is a number that has been climbing higher and higher in the past 30 years. Meanwhile, last year the number of first-time homebuyers reached the lowest point in three decades.
“The traditional time to buy was when people got married and had kids and wanted to settle in one place, be in good school districts and have access to their job,” Carol Galante, faculty director of Berkeley’s Terner Center for Housing Innovation, told Money magazine.
People are getting married later now than in decades past and having children later in life. The more traditional path still exists, but there are so many more roads for people to go down before buying their first home.
The pandemic may have actually helped some individuals who are buying on their own. Not being able to have many activities or entertainment options while being locked down at home, some individuals were able to save more money than they normally would. Some others also paid down debt, which make them more attractive candidates to be approved for mortgages.
However, not everyone was able to stay gainfully employed during the pandemic. Couple that with student debt and higher rents, and some potential homebuyers are still sitting on the sidelines.
The National Association of REALTORS® (NAR) found that 17% of first-time homebuyers in 2020 were unmarried couples. When NAR first started tracking this data in the 1980s, unmarried couples made up less than one half of 1% of first-time homebuyers. In the same span, married couples went from 75% of first-time home buyers, to 51%.
The Money article pointed out that the new Netflix reality show ‘Marriage or Mortgage’ best explains how this dynamic is shifting the paradigm of homebuying, as it pits a real estate agent against a wedding planner to try and convince engaged couples on which of the two things they should spend their money on – a wedding, or a home.
Another unique strategy that first-time homebuyers are employing includes buying a house they have no intention of living in, instead opting to sit on it as an investment and re-selling it for value later on when they can afford a home in a more desirable location.
Then there’s the new boon of businesses allowing people to work remotely. Ever since the pandemic started and businesses realized that their employees were just as productive, if not more so, at home than in the office, more people are finding that living in proximity to work is no longer a priority.
As such, renters, who can’t afford to buy in an area where they currently live, are finding they can afford to buy outside that area. And since they can now do their work remotely, they are looking into becoming homeowners in more out of pocket areas than they ever would have considered previously.
What’s really important for first-time buyers, whether alone or with a partner, is flexibility. This includes going in on a home with friends or other couples to better manage finances for an eventual home down the road.
Maybe they’ll gamble and buy a home unseen. Or maybe they’ll try alternative mortgage plans that exist in a separate competitive market. Whatever it is, first-time buyers have to be open to the notion of doing things a little differently – or a lot differently – than their parents and grandparents did.