Home buying, like most things, has changed extremely since the 1980s. I thought it would be interesting to compare the trends then and now, and also what 40 years into the future may look like (2062). According to NAR (National Association of Realtors), home buyers in the 1980s spent about 1.7 times their annual income on their house, where buyers today are spending 2.7 or more of their income on their house. (*Keep in mind during that time the country was in a recession due to the oil embargo against the US, and interest rates had reached their highest point at 18%. So, it wasn’t really that much more affordable to buy.)
First time buyers in the 1980s rented for an average of 2.5 years before purchasing, now first time buyers are renting for at least six years. This likely has a lot to do with younger people today putting off marriage and children and sticking to renting.
The most shocking statistic to me, was that the average repeat buyer age today is 56, back in 1981 it was 36! This is very telling. People are not only staying in their homes longer, many more people are staying single or not having children.
My prediction for buyers 40 years into the future (granted we don’t all live in pods), is that the wealth gap between homeowners and renters will grow much higher. We need more housing options on the market that are catered toward single people or small families, tiny homes and van living are some examples. We need to rethink our zoning laws and promote open discussion so we can find the best options for everyone. Millennial’s now more than ever are struggling with student debt, affordability and inventory issues. It’s easy for most young people to rent instead of buy, and with most young people single and unsure of their 5 year plans, they elect to rent. It’s fair to say mortgage rates will not be this low in 40 years, but who knows what the $USD will look like then. Most young people are not buying assets or building wealth, and their wages are not rising with inflation, for these people it will be much harder, if not impossible, to purchase. See Profile of Home Buyers and Sellers.
If you’d like to buy a home, please reach out.