Nationwide, a typical home buyer is 47 years old and earns $93,200 a year, while a typical home seller is 57 years old, with a median household income of $102,900, according to the 2019 NAR Profile of Home Buyers and Sellers. Based on the survey, first-time buyers made up 33% of all home buyers—the same percentage as last year. Low inventory, weak affordability, and student debt are factors that make it more difficult for some people to buy a home.
How does the Washington, D.C. area compare to these national figures? We took a closer look at the housing market in both the District of Columbia and Montgomery County.
Millennials—or buyers between the ages of 22 and 40—made up the largest group of homebuyers in the District. Specifically, 53 percent of all homebuyers in D.C. were millennials; 34% of Montgomery County home buyers were millennials. Comparing the typical buyer in these two areas, we see that buyers in the District are younger, earn about $15,000 more, and are more likely to be unmarried compared to buyers in Montgomery County. That said, only 12% of D.C. transactions were all-cash, while all-cash transactions accounted for 20% of those in Montgomery County. Since housing is more expensive in the District, there are fewer buyers who are able to purchase their home without financing.
Regarding purchase characteristics, we found that buyers in the District buy more expensive and smaller homes than buyers in Montgomery County. The median home value was $635,000 in the District compared to $494,000 in Montgomery County. Data shows that a typical buyer in the District typically purchases a two-bedroom home, while Montgomery County buyers typically purchase a three-bedroom home.
It is true that these two areas have very different housing inventories. Based on the sales distribution by home type, 16% of homes in D.C. that sold last year were detached single-family homes, 35% were townhomes and 48% were apartments. Meanwhile, in Montgomery County, 55% of the sales were detached single-family homes, 21% were townhomes, and 24% were apartments. Thus, the size of a typical home for sale in the District was about 1,600 square feet compared to 2,300 square feet in Montgomery County.
Data from the American Community Survey shows that the median duration of homeownership in the United States was 13 years in 2018. But homeowners in some areas move more frequently than those in the rest of the country. Owners in the District of Columbia typically stay in their home for 11 years; those in Montgomery County generally stay for 13. Thus, owners who purchased their homes about a decade ago are expected to put their homes on the market in the near future. Let’s name these owners “potential sellers” and take a closer look at their characteristics.
These “potential sellers” are typically 51 years old in D.C. and 54 years old in Montgomery County. In the District, “potential sellers” earn about $145,000 annually, compared to $154,000 in Montgomery County. The median value of their homes was $650,000 in the District and $490,000 in Montgomery County.
While home prices continue to rise in both counties, these “potential sellers” have already built up some equity from price appreciation. For instance, in the District of Columbia, where home prices increased 27% in the last 11 years, 15% of these “potential sellers” don’t have any mortgage or similar debt. This means that these mortgage-free owners can fully benefit from the price appreciation of their properties.