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National, State & Local Building Industry News 2019: Issue 4
HOME BUILDING MARKET NOW: First-Time Home Buyers Battle Rising Prices, Seek Better Homes NAHB
As the housing industry celebrates New Homes Month in April, recent data from the American Housing Survey (AHS) confirms nearly two-thirds of first-time home buyers say a better home is the top reason for moving, followed by household formation, 61 percent and a better neighborhood, 49 percent. First-time home buyers make up 37 percent of all households who purchased homes in the two years preceding the release of the 2017 AHS, down from 39 percent in the 2015 AHS. The median price of homes purchased by recent home buyers, including first-time buyers and previous home owners, known as trade-up buyers, increased by 10 percent from the 2015 AHS. “First-time home buyers are eager to move to better homes and neighborhoods, yet home prices remain a challenge,” said National Association of Home Builders (NAHB) Chairman Greg Ugalde, a builder and developer from Torrington, Conn. “Public policies and incentives that support home affordability can help buyers find a home that fits their lifestyle and family.” Home builders recognize the complexity of factors that contribute to higher home prices and the cost of housing. In today’s market, issues such as the supply of land; federal, state and local regulatory requirements; and a shortage of skilled labor makes it difficult to increase the supply of affordable housing. The demographics of first-time and trade-up home buyers remained largely unchanged from the 2015 AHS: the typical home buyer was 40 years old; first-time buyers had a median age of 32, compared to a median age of 47 for trade-up buyers. Twenty-seven percent of recent home buyers were racial or ethnic minorities, about the same as in the 2015 AHS. In a positive sign for the spring home buying season, the Federal Reserve last week signaled that it envisions no rate increases in 2019 and only a single rate hike in 2020. While public policies to improve housing affordability are needed, the recent Fed announcement will help housing markets this year.
The Changing Demographics of Firsttime Homebuyers www.realtrends.com
Single women are one of the fastestgrowing demographics in the housing market, according to realtor.com research. The future of real estate will be significantly influenced by women, millennials and Hispanics, according to realtor.com®‘s analysis of first names on 2018 home sales deeds. Single women are one of the fastestgrowing demographics in the housing market, according to the data. Although older Baby Boomer and Silent Generation women are leading the charge, the increase in deeds with female names is particularly visible when comparing genders within the millennial generation. Looking solely at names with a peak year between 1981 and 1997, millennial female names are outpacing millennial male names, with home sales with female names beating male name home sales by 1.5 percent (6.9 percent versus 4.4 percent on average year-over-year, respectively). Seven of the top 10 fastest growing buyer names are predominately millennial female names, and all of them peak in the 1980s and 1990s. Overall, Hannah, Austin, Alexis, Logan, and Taylor — of which three are predominantly female names — were the top five fastest growing first names on home sales deeds in 2018, with their frequency seeing an average increase of 22 percent from 2017. While Michael, John, David, James, and Robert were still the top five first names on sale deeds by sheer volume, these names saw a 3 to 5 percent decline over 2017. Millennials are NOT the rent generation In 2018, home sales with millennial names1 increased 5.3 percent, followed by Gen X names at 0.8 percent. Names of Boomers (born 1946 to 1964) and the Silent Generation (born before 1945) fell 2 percent and 3.5 percent, respectively. Geographically, millennial buyer names are particularly overrepresented in Kansas, Indiana, Louisiana, Missouri, and Utah – states where housing affordability remains
above national levels – confirming that jobs and availability of entry level homes act as magnets for young buyers. The rise of Hispanic influence Deed data also shows a growth in Hispanic demographics names. In 2018, home sales associated with traditionally Hispanic names and partially Hispanic names increased 4.1 percent and 3.7 percent, respectively year-over-year. While sales with non-Hispanic names remained virtually flat at 0.1 percent year-over-year. Notably, 26 of the top 100 fastestgrowing names are traditionally of Hispanic origin. Within this category, Hispanic buyer names skew slightly older than their nonHispanic counterparts, with a median birth year of 1979 and 1982 respectively. Geographically, Hispanic buyer names are naturally concentrated in the South and Southwest. California, Texas, Nevada, New Mexico, and Arizona are among the top states, unsurprising given their proximity to Central America. On the East Coast, sales to buyers with Hispanic names are overrepresented in Florida, Illinois, and New Jersey, where demand for homes from domestic and international buyers of South American and Caribbean origin tends to be concentrated. Methodology This analysis looks at all arms-length,
residential non-corporate transactions for the period of January through September 2018. Sales for 2017 are also analyzed to enable year-over-year comparisons. Realtor.com® compared name demographic data from the Social Security Administration to deed record buyer information to understand how younger age groups are expanding their influence in the housing market. For example, the data showed that half of Hannahs were born before 1993, and 80 percent of them between 1987 and 1997, thus giving Hannah a high likelihood of being a millennial buyer. Millennial names are identified as those peaking between 1981 and 1997, Gen-X names between 1965 and 1980, Boomer names between 1946 and 1964 and Silent names before 1946. Buyer names are identified by parsing the first name from the primary name on the deed record at the time of the transfer of ownership. Middle names and last names are not parsed. In cases when the deed has more than one buyer name recorded, the information is used to identify multi-name deeds but non-primary names are not parsed. Some limitations include home buyers not always going by their first name and not all names listed as primary are necessarily being heads of the household.
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