And they haven't recovered since. Today, the homeownership rate for both groups is lower than it was more than 20 year ago. But the picture now is looking bleaker than it did before and even during the crisis. Home prices have returned to their precrisis peaks, but homeownership rates, which were already depressed because of the crisis, keep on slipping. Affordable housing is becoming scarcer across the country, but especially in popular markets such as the Pacific Northwest and California. And homebuilders have stopped building starter homes at the same rates they did before the crisis, instead turning to the more lucrative luxury home end of the business. Single-family starts are
Altogether, these factors are the ingredients for an affordability crisis. Many would-be first-time homebuyers have been forced to continue renting or living with Mom and Dad after being priced out of the market.
"We do know that homeownership rates for young people are lower," Danielle Hale, managing director of housing research at the National Association of Realtors, said. "They're now lower than in the mid-1990s."
But signs are cropping up that the tides may be finally shifting to get the home sales market back to where it once was. Citing mortgage application data, the Mortgage Bankers Association has noted that there's greater demand year over year for loans under $150,000. Those loans are closely associated with first-time homebuyers, indicating that they are starting to return to the housing market.
But chances are that once they do return, they'll be older thanks to the waiting game caused by the financial crisis. For the past two decades roughly, the median age of first-time homebuyers has hovered within a range from 30 to 32 years old. Looking ahead, first-time buyers may enter homeownership later in life.
"There may be some aging on the horizon if some of those people who haven't yet become homeowners choose to do so at a later age," Hale said.
