Share of young homebuyers declines after peaking in 2020

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The Midwest had a higher share of young shoppers than coastal metros in 2021

There is a noticeable difference between younger homebuyers, those aged 30 and under, and older millennial homebuyers, aged 31 to 40. -up purchase. On the other hand, young people have more financial difficulties when they compete to buy houses, because they are just starting their careers. have little or no credit history; limited or no savings and generally lower income.

The low supply of homes for sale is pushing up home prices. Since 2021, record home price growth has created affordability issues, especially for younger buyers.[1] The share of young homebuyers peaked at nearly 22% in 2020 as record mortgage rates improved affordability for buyers and the pandemic – which exposed older populations to greater health risks – discouraged older people to buy (Figure 1).[2] However, in 2021, the share of young buyers returned to pre-pandemic levels before continuing to decline in early 2022.

Since the 2022 data includes January and February, we looked at the same months for previous years to control for seasonality. The adjusted trend shows that January and February 2022 are at 10-year lows.

Figure 1: Share of young homebuyers declines after peaking in 2020

Source: CoreLogic Fraud Consortium loan application data

© 2022 CoreLogic, Inc., All Rights Reserved.

Note: 2022 only includes data from January to February

Young adults make up a higher proportion of homebuyers in Midwestern markets, but a lower proportion in expensive coastal areas. Figure 2 plots the share of young homebuyers against the affordability index for metropolitan areas in 2021.[3] There is a positive relationship between the proportion of young homebuyers and the affordability index, meaning that a greater proportion of young people are buying in more affordable markets.

Figure 2: The share of younger homebuyers is higher in more affordable metros, 2021

Figure 2 The share of young homebuyers is higher in more affordable metros 2021

Source: CoreLogic Fraud Consortium loan application data

© 2022 CoreLogic, Inc., All Rights Reserved.

Figure 3 shows US metros by share of young buyer applications in 2021. Young applicants represented a higher share of potential buyers in Midwestern markets.

Provo, Utah had the highest percentage (37%) of young adults applying for a home loan, followed by Ogden, Utah at 35%; Grand Rapids, Michigan with 34%; Des Moines, Iowa with 34%; Pittsburgh with 32% and Buffalo, New York with 32%.[4] Omaha, Nebraska; Wichita, Kansas; Colorado Springs, Colorado and Cincinnati were among the top 10 metropolises with the highest percentage of young home buyers and these metropolises are also more affordable areas to buy a home.

Conversely, the Florida and California metros had the lowest percentage of young adults applying for a home loan. North Port, Florida had the lowest percentage at 10%, followed by Cape Coral, Florida at 11%; Deltona, Florida with 13%; Oxnard, California with 15% and Miami with 15%. Los Angeles; Bridgeport, Connecticut and San Francisco were among the top 10 cities with the lowest percentage of young adult applicants.

Figure 3. US metropolitan areas based on share of young homebuyers in 2021

Midwestern metros had a higher share of younger homebuyers

Figure 3 U.S. Metro Areas Based on Share of Young Homebuyers in 2021

© 2022 CoreLogic, Inc., All Rights Reserved.

Rising mortgage rates will further reduce homebuyer affordability. Likewise, house prices are expected to rise, albeit at a slower pace than in 2021.[5] These trends toward record home prices and rising mortgage rates will have the greatest impact on young potential buyers and low-income buyers.

[1] View CoreLogic HPI

[2] Only first-tier home purchase applications were used for this study from the CoreLogic loan application database.

[3] The Affordability Index is calculated using the NAR Housing Affordability Index formula.

[4]Among the top 100 metros, based on 2020 population.

[5] U.S. Home Price Overview – CoreLogic®

© 2022 CoreLogic, Inc., All Rights Reserved.

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