First-Time Homebuyers: Older, Singler, Not Much Richer

• First-time homebuyers today are typically older, spend more time in rental housing, are less likely to be married and are buying more expensive homes than they were in previous decades.

Real estate is like a ladder – you start at the bottom and work your way up, from renting, to buying a first home and moving into bigger and/or different homes along the way as your family grows and your needs change.

First-time buyers are perhaps the most critical rung on the ladder, as they both purchase the entry-level homes occupied by slightly older families, and allow those more mature families to sell their home and use the proceeds to help them move up. By moving out of rental housing and into homeownership, first-time buyers also help ease rental demand, making it easier for their younger brethren to get started up the ladder themselves.

But while the role of first-time buyers in the market has stayed relatively constant over the decades, the characteristics of typical first-time buyers have changed dramatically. First-time homebuyers today are typically older, spend more time in rental housing, are less likely to be married and are buying more expensive homes than they were in previous decades.

Zillow analyzed data from the University of Michigan’s Panel Survey of Income Dynamics (PSID) to calculate some key statistics.

Methodology

In order to identify first-time homebuyers in PSID data, we followed the children of households in the survey until they purchased a home. These children are represented in the data as families split-off from the original family.