Last year made homeownership even harder for young adults, who already struggled with first-time home buying.
What Happened: Millennials are no longer the largest demographic of homebuyers, as they were in 2020 and 2021, according to the National Association of Realtors' (NAR) 2022 Profile of Home Buyers and Sellers study.
Instead, buyers between the ages of 55 and 74, who have made up 44% of all house purchases so far this year, are in the lead.
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Just 14% of purchases were made by young millennials, who are frequently first-time homebuyers; this is down from over 25% in 2021.
“The share of first-time homebuyers dropped to the lowest level we've ever recorded,” says Jessica Lautz, deputy chief economist at NAR. “What’s really striking about the first-time homebuyers this year is that the median age moved to 36 years old. We’re now seeing a first-time homebuyer who's now closer to 40 than they are to 30.”
According to the NAR, millennials' retreat from the market is mostly the result of high home prices, lack of housing supply causing increased competition, and decade-high mortgage rates.
So, what should a young homebuyer look for?
Odest Riley, owner of real estate company WLM Financial said, “the best advice I could give a millennial buyer in 2023 is to look for diamonds in the rough – homes that have been sitting on the market for much too long, maybe they need a little paint and new flooring.”
If the quoted mortgage rate is too high for their budget, a buyer may also request assistance.
The 2-1 buydown has proven to be a popular strategy for anyone trying to purchase a home in today's higher-rate market, according to Anthony Marguleas, founder of Amalfi Estates.
“This is where an impound account is set up, and the seller puts money aside,” Marguleas says. “The buyer then gets a 2% decrease in their interest rate in the first year and 1% in the second year.”
Though, it would return to the full interest rate by the third year.
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