We should not neglect cultural changes as a driver of economic behavior.
There’s a lot of handwringing over a National Association of Realtors (NAR) annual survey showing that the median age of first-time homebuyers has hit 40, up from 28 as late as 1990. There’s now a sharp split between the median age of all homebuyers (59) and first-timers, whereas in the early 1980s, the typical homebuyer was 31 and the typical first-time buyer was 29. (The narrowness of the split at that moment may have been an anomaly, given that the survey began in 1981 at a time of 20 percent interest rates, when no sane homeowner would abandon their current mortgage to take on a new one; by the mid-1980s, the split was usually five or six years.) More than a third of first-time homebuyers (36 percent) are still under 35, but that’s now a distinct minority. On the other hand, while some of these are long-term trends, NAR’s prior surveys show that, from the start of the Clinton presidency until Joe Biden took office, the median first-time homebuyer was between the ages of 30 and 33.
There are a lot of factors that go into this sort of trend, both in terms of the economy and government interventions in the economy. Homebuying, like any economic activity, is affected by multiple supply factors (including new construction, reasons why current homeowners may sell or not, and corporate ownership of homes) and multiple demand factors (including the incomes and student-loan debt of prospective buyers, tax incentives for mortgages, and the convenience of homes to work, schools, and safe neighborhoods). For example, the NAR survey shows that all-cash buyers are now 26 percent of all buyers, up dramatically from 7 percent in 2003, with most of the spike occurring since inflation and interest rates went through the roof in 2022. That’s mostly an economic phenomenon. Even if interest rates came back down, we won’t return to the low down-payment environment that preceded the 2008 credit crisis.
But we should not neglect cultural changes as a driver of economic behavior. Sharply declining rates of marriage among people under 30 is undoubtedly a very major influence on why younger adults are not buying homes, particularly houses. We can’t have a meaningful discussion of why people are delaying buying houses if we don’t mention that people are delaying getting married and having children.
Buying a home makes the most economic and personal sense if you intend to raise a family. Traditionally, that has been the biggest spur to buying a home. Young people leave their parents’ house, rent an apartment with some friends, marry, rent a little place together for a few years, scrimp and save, and buy a house before or after the first baby arrives. (True, the housing market includes rented houses and purchased apartments, but most houses are owned, and most apartments are rented.) My wife and I started looking for a house once the second child came. We moved to a bigger house when our third child came, and moved again when my wife’s mother moved in with us. Being married makes you more interested in having the space to have children; it makes you more willing to settle down in one place and commit to staying there a while; and marriage is also a highly effective economic unit that makes couples more capable of handling the costs of buying a home as well as the labor that goes into maintaining one.
It’s not hard to see signs of these well-known trends in the NAR data. In 1981, 73 percent of homebuyers were married couples; that’s now down to 61 percent, with unmarried couples having risen from six percent in 1981 to a peak of 10 percent in 2006, but dropping back to 6 percent now (a few points of which may be explained by gay couples being almost exclusively unmarried in the mid-2000s). In 1981, unmarried women were 11 percent of homebuyers, and unmarried men were 10 percent; today, unmarried women are 21 percent, while unmarried men are 9 percent. I’d be willing to hazard a guess that unmarried men who buy homes are much likelier to do so in expectation of a future or impending marriage than are unmarried women. But the decline in married couples as a share of first-time homebuyers is much less than the decline in married couples as a share of Americans under 30. For example, per the Census Bureau in 2022, among Americans born between 1940 and 1954, between 75 and 85 percent of men and an even higher percentage of women were married by age 30; by the 1985–89 age cohort, that had dropped below 50 percent for men and below 60 percent for women. Two-thirds of men born between 1940 and 1944 were married by age 25; only 20 percent of men born between 1990 and 1994 were. So long as married couples remain the clear majority of new homebuyers, the steady decline in young married couples can be expected to drive a corresponding steady decline in young homebuyers.
Of course, marriage itself is an economic as well as a cultural decision, so part of the reason why young people are delaying or avoiding marriage is that they fear that they can’t afford it. And fear of being unable to afford buying a house is part of that, so again, we can’t entirely separate the cultural shift from the economics. We should, whenever possible, want our economy to make it more attractive to marry, have children, and own a home. But we also need to raise children to desire those things for themselves.