Today's homebuyers are a lot different than those of the past.
Gone are the days when first-time buyers were mostly married, with kids, and had previously rented.
No longer is it as easy or desirable to borrow from banks for everything, instead of saving up or getting help from family for a down payment.
And instead of getting away from family and moving to the city, there's a lot more preference for living nearby or even together, in the suburbs.
Welcome to the modern housing market – where millennials dominate, buyers are older, singles and pets are in, homeowners remain in one place for longer, young people stay at home to save money, and the Bank of Mom and Dad is the go-to lender.
"This is a different type of buyer," said Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors. "It’s a different first-time buyer and repeat buyer."
Here are some of the trends that are shaping the housing market:
Who are the buyers?
Millennials may now be the largest generation in America for many categories, but they're not yet the biggest buyers. According to data from the U.S. Census Bureau, the homeownership rate for those under age 35 is the lowest recorded since 1982.
"They may be the largest generation of buyers, and that's absolutely impacting your business. They think about things differently. They do things differently," Lautz told a group of real estate agents in Cheektowaga. "But they're still not getting into it at the same rate as generations before them."
Today's buyers are also older overall, especially among "repeat" buyers who are either moving up or downsizing from their previous house. According to NAR data, the median age of all buyers is now 46, up from 31 in 1981.
For first-time buyers, the median is up to 32 from 29, but still generally "the same age as their parents and grandparents before them," Lautz said.
But people are staying in their homes for longer and delaying that second or third purchase. So where repeat buyers were most often in their mid-30s in 1981, the median is now 20 years older, at 55.
"That shift speaks to people working longer. It speaks to them living longer," Lautz said. "We see that they’re feeling confident and taking out mortgages, but doing it at a much later age."
There's also a demographic shift in the population, as many cities nationwide already have more minorities than white residents. That's going to continue, Lautz said. Yet, the homeownership rate among African Americans, for example, hasn't recovered since the recession.
"We can actually see it's at the same rate today, as when it was illegal to discriminate by race and housing in 1968," she said. "That's a problem."
Money, money, money
Homebuyers today also have "substantially higher incomes than buyers had in the past," Lautz said.
At the same time, though, many are also burdened by staggering student debt. Nationwide, total student loans have risen 150% in the last decade, to $1.5 trillion. Overall, according to NAR, the median student loan debt for millennials is $41,200, while their median income is $38,800 – meaning their finances are upside down, and they can't save for a down payment, or they're limited in how much they can pay.
That's why 80 percent of millennials are still not homeowners, Lautz said.
And it's not just millennials fresh out of school, but even those over age 60, many of whom went back to school during the recession a decade ago, she added. The debt for those older Americans has risen 1,250%.
So millennials are either delaying their purchase, or they're living with family instead of renting. Last year, 23% of buyers were living at home when they bought their first house, almost double the 12% in the early 1990s.
"They're completely skipping that rental period," she said.
Many millennials – one third of first-time buyers – are also borrowing from their parents to cover down payments at the highest rate ever, Lautz said.
Millennials want what parents wanted
Millennials aren't that different from their parents – but they think bigger.
Regardless of age, buyers today are more likely to be seeking a home in the suburbs with three bedrooms and two bathrooms.
They're not thinking about a starter home, but going straight to the next level as their first purchase.
"They have a different mindset," Lautz said. "Really, they do see this as a place they want to live for a longer period of time then they would have historically."
They're also looking to be close to family and friends, in the same types of neighborhoods as their parents and retiring seniors, she said.
"That’s a big shift in how families are taking care of each other, in what you want out of a home," Lautz added. "It’s pushing a lot of what traditionally have been urban dwellers to want to live in suburbs and small towns, where there is affordability but also in a home that’s very similar to where they grew up."
But the shortage of homes for sale – especially of lower-price houses that are more affordable for first-time buyers – is also putting some constraints on them, and forcing them to give up some of their preferences.
In particular, Lautz said, environmental sustainability isn't as "cool" as it used to be.
"It doesn't mean people don't want it," she said. "It's just not something that buyers are saying is top of mind."
Who needs a ring?
Forty years ago, 75% of first-time homebuyers were married. Now, it's just over half, "and trending down," similar to the marriage rate overall in the United States, Lautz said.
"There’s lots of swiping going on, absolutely," she said, referring to dating apps. "People are dating, they’re hooking up, they’re shacking up, but they are not getting married."
Instead, there are more singles and unmarried couples buying houses than in the past.
There are also more cases of friends buying homes together, especially so-called "Golden Girls" among older Americans.
What kids? Pets are paramount
One of the common myths in the housing market is that people won't buy houses if they don't have kids or a ring. But Lautz said the facts say the opposite.
Birthrates are now at 30-year lows worldwide. Yet the lack of children – and the associated expenses for daycare, school, food and other costs – also enables those buyers to better afford such a purchase.
"If you have a child under the age of 18, it costs a lot of money. Those kids are not cheap," Lautz said. "You’re seeing this in the home prices, too. For every additional child, you’re making sacrifices somewhere in your budget."
Some households are replacing children with pets, which may then dictate what they're looking for in a house. Green space, for example, becomes more important than schools.
"People will not make compromises for their animals," Lautz said. "They want to be in that neighborhood that accepts the animals in their community, with a dog park and fenced yard. They want to be able to have that home for their pet."
On the other end, the so-called "sandwich generation" – people who must simultaneously take care of young children and aging parents – has now shifted from Baby Boomers to Generation X. As they enter or approach their 50s, they're now the ones who are most likely to buy a "multi-generational" home, particularly among minorities, Lautz said.
"They need a bigger home," she said. "This isn’t a family that’s downsizing or thinking about retirement 10 years off. They need a larger home."