A scarcity of homes for sale largely shaped this year’s housing market, helping to fuel three major trends and a handful of records, according to a recent study.
Buyers got even older and sellers stayed in their homes longer, according to the National Association of Realtors’ 2019 report on home buyers and sellers. New homes made up the smallest share of all sales ever on record.
“Housing supply is tight, that’s a problem,” said James McGrath, co-founder of real estate firm Yoreevo. “We don’t make that 1.5 million homes annually that we used to.”
Another trend in the report reflected the changing social dynamics: The share of married buyers shrunk, while unmarried couple buyers increased to an all-time high.
Here’s what happened in the 2019 housing market.
The median age of all homebuyers hit 47, the highest since 1981 when the report first began. The age of first-time buyers reached a record high of 33, while the median age of repeat buyers maintained its peak from last year at 55.
One reason why the median age is increasing is because younger buyers simply can’t buy a house. There are too few entry-level houses available for sale.
“If you think who the first-time homebuyer is, it’s someone whose income hasn’t grown [recently],” McGrath said. “They don’t have the flexibility with down payments.”
Student debt is also dragging first-time buyers down. College students today graduate with about $30,000 in student loans, according to savingsforcollege.com. Their monthly payments can make it hard to save for a down payment or qualify for a mortgage.
“There doesn’t seem to be any release for the foreseeable future [improvement] in regards to student loans,” said Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors. “People are entering the housing market with student loans, but the typical borrower today is likely to have more family help.”
Sellers are taking their time to put their house on the market. The average seller lived in their house for a record 10 years before selling, according to the report. That’s much higher than the historical trend of six years.
The record-long tenure is also contributing to the dearth of homes for sale.
“There’s a lot of macro things going on,” said Mischa Fisher, chief economist at ANGI Homeservices Inc, a digital marketplace for home improvement. “Boomers are downsizing and staying in place. There are better options for remote work and even things like occupational licensing are discouraging people from moving to different states.”
Fewer new homes, townhomes
In 2019, the share of new homes that sold dropped to an all-time low of 13% – yet another indication of the supply crunch in the market – while the percentage of townhome sales reached a nadir of 6%.
“Since [the] 2007 period, not much investment has been made in entry-level houses,” said Janice McDill, a spokeswoman for Realtor.com, a real estate listings website. “That’s why a lot of people have become renters.”
Fisher expects an increase of new homes next year, but it won’t be enough to resolve the inventory problem.
“Builders are running into a lack of available land due to zoning restrictions. That is something that local governments have to be smarter about,” Fisher said. “You harm people who have the least needs because you make houses more expensive.”
I do vs. I don’t
The share of married buyers fell to its lowest level since 2010 at 61% this year. That’s also well below the historical average of 66% since 1981.
Unmarried couples, however, are becoming a bigger force in the housing market.
This group made up 9% of all buyers – a high – and 17% of all first-time homebuyers, also a record. Relatedly, those roommates buying homes together increased to 4% from 2%.
“This is the first time that among homebuyers that unmarried couples are increasing,” Lautz said.