Young Americans are waiting longer than ever to buy their first home.
According to a new analysis from Zillow.com, the typical first-timer now rents for six years before buying a home, up from 2.6 years in the early 1970s. The median first-time buyer is age 33 ; a generation ago, the median first-time buyer was about three years younger.
The delay reflects a trend that cuts to the heart of the financial challenges facing millennials : renters are struggling to save for down payments. Increasingly too, they are facing delays in some key landmarks in adulthood, such as marriage and children to a stable career.
When young adults do sign the deed, their purchase price is substantially more, relative to their income, than it was decades ago. First-time buyers are paying a median price of $140,238, nearly 2.6 times their income. In the early 1970s, the starter home was just 1.7 times their income.
We see that first-time buyers tend to lean on their parents. According to a Federal Reserve survey, among homebuyers last year under age 34, 14 percent received down payment help from family and friends. Most first-time homebuyers still depend on personal savings for at least some of their down payments. But rising rental prices have complicated the task of putting away money for a down payment. Job security has become a central consideration for first-time buyers as well.
Housing industry experts note that surveys still show a strong desire to buy among millennials, but that their timelines for purchasing depends on achieving more stability in their careers.
