Real Estate Marketing & Beyond
The number of single-person households in the U.S. has doubled over the last four decades, putting more pressure on first-time buyers who’re struggling to get into homeownership.
The supply of entry-level homes up to 1,400 square feet recently hit a fifty-year low, according to Freddie Mac.
“We’re just not building that many smaller homes, despite what you hear about “tiny homes” and that sort of thing,” said Len Kiefer, deputy chief economist at Freddie Mac, in an interview with the Wall Street Journal. “There’s not that much new supply coming online, so the existing supply — which is aging — is fiercely competed over.”
That competition is being made all the more intense by the rising number of one-person households. They numbered 36.1 million in 2020, according to data from Freddie Mac, up from just 18.2 million back in 1980. Of those solo households, Baby boomers account for 39%, while 19% are millennials and another 19% are Gen Xers, the data shows. Gen Z makes up just 3%.
With growing competition, single homebuyers are increasingly making do with the most affordable homes available. The median sales price for homes purchased by solo buyers was $265,000 in August, according to the Housing Center at the American Enterprise Institute. However, data from the National Association of Reators says the median existing-home price is now $352,800, as of September 2021.
It suggests the vast majority of homes for sale are now out of reach of single buyers. Indeed, many report having to move to a new location to be able to find something they can afford. Jonathan Morgan, a 34-year old software engineer from Austin, Texas, told the Journal that he was priced out of the local market. So, he has opted to buy a home in Grand Rapids, Michigan, instead, where he says he’ll be able to live and work remotely. The median price of homes in the Grand Rapids-Wyoming, Mich. metro area is just $278,300, whereas in Austin homes fetch almost double that, with a median price of $515,100.
The report tallies with recent research from Zillow, which found that younger buyers are increasingly finding themselves in competition with baby boomers – and very often losing out. Moreover, a research brief from Freddie Mac found that the majority of single women who are non-homeowners believe they’ll never be able to afford to buy a home.
Interestingly though it’s not just younger singles who are struggling. There is a growing number of baby boomers in single-person households too, either due to mortality or separation, the Journal reported. Many of those older persons are struggling to find suitable housing options too. That’s because there’s a lack of homes available for those who want to downsize. Also, many that have separated are finding that their budgets simply don’t stretch far enough to buy what homes are available.
