With an ever-increasing number of foreign-born homebuyers, a higher share of single female home buyers, and more double-income, no kids buyers than ever before, the U.S. homebuyer has become quite diversified, according to a report from John Burns Real Estate Consulting on Thursday.
Citing a recent report from the National Association of Realtors, Burns pointed out that single women were almost twice as likely to buy a home as single men (16 percent of homes sold went to single women, compared to 9 percent for men) and the gap widens even further after the age of 50. Meanwhile, 65 percent of homebuyers do not have children; 73 percent of homebuyers were couples (65 percent married, 8 percent unmarried) and 11 percent of homebuyers were foreign-born. Burns stated that since "foreign born buyers are less prone to purchase, foreign purchases are heavily skewed to those born in the 1970s. Seventeen percent of buyers aged 35–49 are foreign born—nearly double the percentage of any other age cohort."
Millennials or generation Y (age 35 and under), which is the demographic many analysts have said will be critical for the future health of the housing market, comprised 32 percent of all buyers – the largest share of homebuyers for any age group. Baby boomers made up 31 percent of homebuyers and generation X made up 27 percent; the "Silent Generation" (those born between the 1920s and 1940s) made up 10 percent of buyers. About 68 percent of buyers under the age of 35 were first-time buyers, many of which chose a new home so as to avoid the problems associated with renovation.
"Without FHA financing and a recovering mortgage insurance industry, this buyer would be almost extinct."
Burns noted that younger homebuyers place more emphasis on convenience than on affordability, further proof that the millennial generation values its time more than members of previous generations when they were the same age. The biggest hurdle to homeownership for younger buyers was the down payment; 63 percent of buyers under 35 put 10 percent or less down on a home, while 45 percent of young buyers put 5 percent or less down on a home.
"Without FHA financing and a recovering mortgage insurance industry, this buyer would be almost extinct," Burns said.
About 54 percent of young buyers cited student debt as the biggest obstacle to saving for a down payment, Burns noted, pointing out that an estimated 414,000 fewer homes were sold in 2014 than would have been sold if the student debt levels were the same as they had been in 2005.
"Urban homes and homes closer to work have appreciated much faster, which our consulting team has verified in markets across the country," Burns wrote. "High-LTV programs have played a huge role in the housing recovery. All of these factors combine to create great opportunities for entrepreneurs who understand their local markets and can respond to these increases in demand that cannot be met by the resale market."
Click here to view the NAR's entire report.