Affordability and finances are two big factors influencing today’s home buyers and sellers. They’re also two of the most common denominators among nearly all 11 real estate trends that Jessica Lautz, vice president of demographics and behavioral insights for the National Association of REALTORS®, shared during the 2019 Broker Summit in Austin, Texas.
“We’re talking about populations being restricted,” Lautz said during her presentation. However, eight in 10 non-owners want to own in the future, and buyers are using agents more than they ever have before.
Here are the top 11 real estate trends Lautz wants agents and brokers to keep their eyes on this year.
1. Lack of affordable housing inventory. African Americans have 9 percent less purchasing power than the average buyer, Hispanic Americans have 12 percent less, and people with student loan debt have 19 percent less. It's not just millennials who are strapped with student loans. People over the age of 60 are carrying 1,250 percent more student loan debt than they were a decade ago because they’ve either chosen to go back to school themselves or help their children with tuition costs.
2. Repeat buyers are older and unmarried buyers are increasing. The median age of a repeat buyer is at an all-time high of 55, which has been steadily climbing from 36 in 1981. Meanwhile, the median age of a first-time buyer has only increased slightly over the past 40 years, from 29 to 32. However, the familial status is very different for first-time buyers today. “A lot of people are shacking up but not necessarily walking down the aisle,” Lautz says. In the 1980s, the vast majority were married couples—reaching as high as 75 percent of first-time buyers. That number has since dwindled down to 54 percent today, followed by single female buyers at 18 percent, unmarried couples at 16 percent, and unmarried men at 10 percent. There’s also 2 percent who represent the growing “Golden Girls” phenomenon of cohabitating friends, Lautz says.
3. Caregiving for pets and aging parents. More people are delaying parenthood or are choosing to forgo having children altogether. Worldwide, the birthrate is at a historic low of 2.4 live births per woman, down substantially from the early 1960s when women had an average of 4.7 children, according to the Institute for Health Metrics and Evaluation at the University of Washington. “Japan sells more adult diapers than baby diapers,” Lautz notes. In the U.S., only 34 percent of today’s home buyers have children, which is a record low. “People aren’t starting families, but they are purchasing homes for all their pets.” In fact, pet owners who are shopping for a home say greenspace for pets wins out over local schools right now, Lautz explains. Meanwhile, the multigenerational living trend is continuing to climb. Last year, one in six Gen X buyers purchased a home they could share with their aging parents as well as their children.
4. The bank of mom and dad. One-third of buyers today are receiving down-payment help from family and friends. Plus, nearly a quarter of first-time buyers are moving directly from their family home into homeownership, skipping renting altogether. “They’re waiting to find the right property, and saving money by home and not paying rent,” Lautz says. But that can sometimes make the leap into homeownership more of an emotional move, she adds.
5. Tenure in a home is getting longer. The length of time homeowners spent in their home stayed roughly stagnant, with an average of six years from 1987 to 2008. Then it started steadily climbing, reaching 10 years. It recently ticked back down to nine years in 2018, but overall, buyers today are looking for homes not as a quick investment but as a long-term place to live, Lautz says.
6. Student debt is crushing finances. Honing in on a segment mentioned in trend number one, student loan borrowers carry a median student loan debt of $41,200 and a median income of $38,800. This is causing a seven-year delay in their ability to purchase a home, Lautz says. It’s also affecting current owners with student loan debt, slowing down their ability to make an upgraded home purchase by three years. What’s more, only two-thirds of borrowers are currently paying down their student loan debt, while others are in forbearance.
7. The bar for buyer expectations has risen. The TV effect: According to NAR’s 2019 Profile of Home Staging released in March, a median of 10 percent of REALTOR® respondents cited that buyers felt homes should look the way they were staged on TV shows, and 38 percent of respondents said TV shows that displayed the buying process impacted their business. But staging can help by creating better photos that bring in online shoppers, Lautz says. Also, 83 percent of buyers’ agents who took the survey said staging a home made it easier for a buyer to visualize the property as a future home.
8. Sustainability is a cool concept—when buyers can afford it. Green and energy-efficient features are lower priorities on buyers’ wish lists than a decade ago, Lautz says. However, more owners are making updates and retrofitting homes with energy-savvy systems after moving in.
9. Marijuana is a “budding” issue. Commercial practitioners are likely seeing an increase in demand for warehouse and storefront space in states where medical or recreational marijuana is legal. When it comes to residential properties, about 18 percent of leasing agents report difficulty with the smell, and about one-third have seen addendums added to leases which restrict growing or smoking on properties.
10. Agent use is high. “Not that kind of high,” Lautz jokes. Buyers want an agent who will walk them through the homebuying and selling processes. “We’re not seeing the fear of technology replacing agents in the data,” she says. In fact, millennials are using agents at higher rates than previous generations. Also, for-sale-by-owner deals were only 7 percent of all sales in 2018, down from highs of roughly 20 percent in the 1980s and early 1990s.
11. Homeownership is the goal. Like baseball and apple pie, nine out of 10 non-owners still see homeownership as part of the American Dream. And, eight out of 10 plan to own in the future.