The New First-Time Home Buyer
Friday, May 25, 2018
The homeownership rate of households headed by people aged 30 to 34 fell to 46.3% in the first quarter of 2018, according to the Census Bureau, a disappointment for those who hoped the upward turn in the fourth quarter of 2017 (to 47.1%) was a sign of better times to come. These bobbles do not rise to the level of statistical significance, of course, but over time small upward shifts can build to something meaningful. Alas, the latest downturn suggests the upward bobble had no meaning.
This requires new thinking. Historically (before the Great Recession) homeownership became the norm (rising above 50%) in the 30-to-34 age group. But beginning in 2007, the homeownership rate of 30-to-34-year-olds went into a tailspin. In the second quarter of 2011, the rate fell below 50% for the first time. It's been stuck there ever since.
After years of watching and waiting for the age group's homeownership rate to recover, time's up. Demo Memo is removing the “first-time home buyer” distinction from the 30-to-34 age group and bestowing it instead on 35-to-39-year-olds. They are the nation's new first-time homebuyers – the age group in which the homeownership rate first surpasses 50%. Drum roll...
Homeownership rate of householders aged 35 to 39, first quarter 2018: 57.1%
There's good news in the latest number. In the first quarter of 2018, the homeownership rate of households headed by 35-to-39-year-olds cracked the 57% threshold for the first time since 2012. These no-longer-young adults just might be buying homes. Feelings of jubilation should be tempered by the fact that the current homeownership rate of 35-to-39-year-olds is well below its peak rate of 65.7% reached in the first quarter of 2007.
Nationally, the homeownership rate was 64.2% in the first quarter of 2018, up from 63.9% one year earlier. The increase was not statistically significant.