A Homebuyer Mystery

Asked who is the most likely homebuyer, many of us would say young families.

We would be wrong.

Homebuyers

Housing markets have changed. Currently at a median age of 38, first-time time buyers used to be younger. And, as for the average age of a US homebuyer–it’s a whopping 56 years old:

In addition, those older Americans are buying older homes. In Buffalo New York, the average home purchase was a 69 year-old house. Much younger, in Provo Utah, it was 6 years:

Housing Markets

Housing markets are not welcoming first time buyers.

One reason is insufficient new construction:

Also, mortgage rates remain up and housing prices are still in pricey territory. Then, tariffs make it all worse. Because homebuilders use imported lumber, steel, nails and screws, they’re starting fewer projects.

Our Bottom Line: Generational Wealth

Lastly, the baby boomers have the money:

And they are buying the homes:

Baby boomers (born 1946 to 1964) are supposed to reflect the “life-cycle hypothesis.” Theoretically, when they were young, their spending exceeded their income. Then, accumulation became possible during middle age. Now, much older, they sell assets and spend more than they earn.

However, The Economist tells us that baby boomers tend to be frugal. Explaining why, they begin with wanting to leave something for their grandchildren. Then, with the pandemic having influenced them, the boomers developed “hermit-like” habits. But the biggest reason is longevity. Expecting to live far longer than their parents, baby boomers tried to accumulate the income they will need.

Maybe it also makes sense that baby boomers, at an average age of 56, are buying homes.

My sources and more: Thanks to Sherwood, here and here, for the facts and graphics in today’s post. Then, completing the picture, The Economist had the baby boomer spending facts.