The Mix of Repeat Home Buyers is Changing Rapidly

NAR has put out some data showing how much tougher it has become for younger people to sell their home and buy another. Repeat sales for people 44 and younger have fallen off a cliff.

Obviously, most of this segment bought during the last decade and are now “equity-challenged.”

Generations X and Y are either renting or stuck in homes they can’t sell. Attitudes towards home-ownership will be very different for them than for their parents.

From NAR:

• Repeat buyers accounted for 63 percent of the home buying market in the last year according to the most recent Profile of Home Buyers and Sellers.
• The typical age of the current repeat buyer is now 53-years-old, up substantially from 41 years reported in 2001.
• Repeat buyers who are aged 35 to 44 years old shrank to just 19 percent of the market in 2011 from 34 percent in 2001, while the age category of 55 to 64 years doubled to 26 percent in 2011 from 13 percent in 2001.

This is all a part of the discussion that John Glynn started earlier in the week. He discussed how, because investors were dominating the low-end, we simply won’t have as many move-up buyers down the road.

Gross and McCulley teach us that there is a food chain in the housing market. Move-up buyers need first-time buyers to sell to, or they don’t move. So it goes up the socioeconomic scale from fixer to McMansion.

But today’s activity is investor driven. I’m wondering if this matters. Is it an unhealthy flavor of demand? Investors are mopping up the carnage of housing bubble past/present. Their acquisitions become A) rental units and B) flips/rehabs sold to first time buyers.

As the Millennial Generation ushers in social mood change with respect to housing, they threaten the Plankton Theory right at the bottom. But if they don’t want to buy entry level housing, investors will buy it to rent it out to them.

Interesting stuff.