If you are 75 or older, chances are slim that you’ll be a first home buyer any time soon. While that should come as a surprise to no one, it might raise a few eyebrows to suggest that many under the age of 40 won’t be either. This, extraordinary though it may be, is the unfortunate truth.
It Wasn’t Always Like That
Not too long ago, it was almost formulaic. You’d graduate from school, land a good job, tie the knot and buy your first home. By the age of 25, you’d already be settled in.
Today, that first residence is more likely to consist of two rooms in the basement of your parents’ house. The average age of the first-time homebuyer has risen from an average of 23 during the 1960s to 35 today, and experts predict that this could rise to as high as 40 by the end of the decade. What has gone wrong?
Money Woes a Factor
Many young people today are fresh out of college, burdened with loans and unable to find a job of any kind. These unfortunates find it impossible to qualify for a mortgage. Some others who have already embarked upon careers feel obliged to wait for an improvement in their financial situations, often citing job insecurity as a chief reason for their hesitation.
People today are also waiting longer to wed. Over the past half century, the age at first marriage rose from the early 20s to a current average of 27 for women and 29 for men. With no family yet in the picture, many see no reason to purchase a home.
As Expenses Go Up, Confidence Goes Down
Additional factors, such as rising home prices, escalating interest rates, snowballing rents and a higher cost of living leave many potential buyers struggling to cobble together even a minimum down payment. As a result, renting has become a way of life. This may be the only option now, but over the long haul, it is far from cost-effective.
Is there Light at the End of the Tunnel?
There is no doubt that people are struggling. Although few are happy renting a studio apartment or remaining behind with mom and dad, many believe it to be their only option. I lived at my in-laws for 8 months before moving out when I first got to California.
However, this unwanted downtime may have its hidden advantages. It not only gives the potential buyer the chance to accumulate a better down payment but also affords an opportunity to shop around and scout out the ideal location. Since today’s average first-time buyer will remain in his home for at least five years, the wait could prove advantageous in the end.