Who Are the Homebuyers of Today?

Recent data shows changing trends in homebuyer demographics. A report from Veritas Urbis Economics compares 2017 data to the previous generation of buyers, those in 1981. The percent of women buying homes shot up from 18.9% in 1981 to 46.4% in 2017. Specifically, the number for single women is over double, from 9.1% to 18.9%, an all-time high. Older generations and single-owners are also a larger share, with 55+ buyers increasing from 16.1% to 27.8% and single-owners from 15.3% to 21.2%. By contrast, the categories that have dropped are homebuyers under 35 and homebuyers with children. The former decreased from an all-time high of 52 to an all-time low of 33.7%. The latter was also at an all-time low of 40.7% in 2017, down from 51.4% in 1981.

More: https://www.housingwire.com/articles/43199-who-are-todays-homebuyers

Homeownership in the 1950s vs Now

San Francisco data gives a glimpse into just how difficult it can be to own a home in California today. On a median salary of $72,340 — about $18,000 more than in other states — teachers in San Francisco are still not even able to afford 1% of the homes on the market. Some school districts are being forced to develop affordable housing for teachers to prevent loss of staff. A year of mortgage payments would cost nearly $94,800 on an average-priced home at $1.61 million.

Compare this to the year 1959, when teachers were making about $5200 per year and homes cost only $12,788 on average. Interest rates were actually higher, but payments were much easier, costing only $708 per year. Annual costs to own the average home were about 13.6% of median annual salary, compared to a whopping 131% today, nearly ten times the 1959 figure.

Why was it so much easier in the 1950s? Because it hadn’t been easy during World War II, and once the war ended, there were efforts made to fix that. There weren’t enough homes, and there wasn’t any money going into building them because of war spending. Post-war, the introduction of GI bill allowed many veterans — which were a large proportion of the population — to gain easy access to home loans, and FHA regulations also increased the number and types of loans available. With more people able to acquire loans to purchase homes, developers began building more, particularly in suburban areas.

Not everyone benefitted equally from these programs, though. FHA and VA programs both excluded African Americans and other people of color via a process known as redlining. Communities were rated on a four point scale, with red being the worst. Points were deducted from older areas and areas where people of color were living, which frequently were the same thing. This merely accelerated existing prejudices and resulted in a self-fulfilling prophecy, as already disadvantaged groups never got access to homeownership and continued to be forced to rent rather than acquire value on their home.

More: https://www.curbed.com/2018/4/10/17219786/buying-a-house-mortgage-government-gi-bill