Diversified Lifestyles and New Opportunities: How Shifting Socioeconomic Trends are Changing Homeownership
Married Couples aren’t the Only Ones Buying Homes Anymore
By Sarah Friedmann
American demographics are continually evolving and, along with them, the public and private sectors are changing as well. Namely, in the real estate industry, the age and marital status of a typical homeowner is changing slowly but surely. Home buying in the United States was once an area very much dominated by young married couples. Now, other groups of buyers are becoming increasingly prominent players in the homeownership arena. To fully contextualize this homeownership shift, it’s helpful to examine why these changes have occurred and what the real estate industry can do to respond to them.
Moving Away from The Married Couple Prototype
A new study from the National Association of REALTORS® (NAR), 2019 Home Buyer and Seller Generational Trends, spotlights these shifting demographics. This report tracked many trends associated with American homeownership and summarized takeaways in a news release on April 1. The study indicated that, for the sixth year in a row, millennials (those born from 1980-1998) represent the largest generational group of home buyers. In addition to a continued uptick in millennial homeownership, the report also pointed to several other key trends that will similarly continue to change the future of home buying and selling.
For example, “while the majority of buyers in all age groups are married couples, single buyers and unmarried couples continue to make a mark on the real estate market. Single females accounted for 25 percent of all younger boomers [born 1955-64] and silent generation [born 1925-45] buyers,” NAR noted in its press release. The organization further indicated that, among younger boomers, divorced women are increasingly becoming homeowners, and, for the silent generation, widowed women are moving into homeownership. Moreover, the report found that, especially among younger millennials (those born between 1990 and 1998), unmarried couples are increasingly becoming home buyers, making up around 20 percent of this generational group’s home purchashers.
In addition to trends toward single and unmarried homeowners, the study also revealed that more Americans are residing in multigenerational homes. For individuals in older generations, these living arrangements accommodate themselves and their adult children, while, for younger Americans, multigenerational homes typically result from adding aging parents into the family home.
Powerful Socioeconomic Factors Drive Home Trends
Movement away from married couple homeownership is occurring for a variety of reasons. Single women homeowners are far outpacing single male homeowners — by a ratio of two to one — because, generally, women tend to place more significance on homeownership than men, NBC News reported. This penchant for homeownership, coupled with a generational shift in priorities, has helped encourage single millennial women to purchase homes.
“When you look at the data, there are a couple of corresponding elements that really play into what motivates women to become homeowners … Independence is a big one, so is empowerment,” Kathy Cummings, the senior vice president for Homeownership Solutions and Affordable Housing Programs at Bank of America, said during a November 2018 NBC News interview. “I think women have come to discover, unlike my baby boomer generation, they don’t have to follow the traditional path of getting married and then buying a home and having children. Moreover, millennial women’s higher educational attainment has helped increase their financial independence compared to previous generations of women, raising the likelihood that they can pursue homeownership independently, Forbes reported.
For older women, individual homeownership often comes at the beginning of a new phase in life, usually through a divorce or the death of a spouse. “They’re either divorced or their husbands have died, and they have the money and they’re buying,” Jane Fairweather, a real estate agent in Bethesda, Maryland, told CNBC. “They want stability. They want to have control over their monthly expenses. They’re going to be where their children or friends are. They’re not whimsical at that age.” Notably, this trend lies counter to that of aging single men, a group with which increasing age is negatively associated with homeownership, CNBC revealed.
In addition to single women, multigenerational families are increasingly occupying the same homes, NAR’s study revealed. The organization indicated that multigenerational occupancy is often driven by financial or familial necessity. For older millennials, the need to care for aging baby boomer parents or the desire to have their parents help with care for their own children (due to the high cost of childcare), often drives these buyers to seek out multigenerational homes, both NAR and the Pew Research Center found. "There's an increase in caregiving for older parents," Amy Goyer, a family and caregiving expert with AARP, told Value Penguin. "As baby boomers are aging, that's going to continue to grow an older population that needs help, and moving in together can help provide that care."
For younger millennials, NAR reported, multigenerational living sometimes results from home affordability issues. “The high cost of rent and lack of affordable housing inventory is sending adult children back to their parents' homes either out of necessity or an attempt to save money," Lawrence Yun, NAR chief economist, said in an April 2019 press release. However, Yun added that many younger millennials do eventually become independent homeowners after saving money by residing with their parents for longer periods of time. "While these multi-generational homes may not be what a majority of Americans expect out of homeownership, this method allows younger potential buyers the opportunity to gain their financial footing and transition into homeownership,” Yun noted. “In fact, younger millennials are the most likely to move directly out of their parents' homes into homeownership, circumventing renting altogether."
Notably, while multigenerational living is often a necessity due to family or financial needs, it’s also increasingly becoming a preferred option for many Americans. As Forbes described, more Americans are now drawn to the benefits of multigenerational living, recognizing that residing in close proximity to their extended families has both practical and personal perks. In addition to the financial benefits of having family-provided care for aging relatives and young children, multigenerational living also often has a positive impact on development. Studies have shown that living with grandparents increases the likelihood that children will succeed in school, and regularly interacting with their grandchildren helps diminish grandparents’ likelihood of developing dementia and depression, Alzheimers.net reported.
Policy and Practice: Changing Calculations for Real Estate
For those in the real estate industry, this slow move away from a young married couple as the prototypical homeowner unit means that the industry will likely need to approach home buying and selling a bit differently, something which it has already started doing in some markets. For example, as RIS Media explained, single women homebuyers tend to prioritize location and affordability over home size. Many of them are also particularly drawn to homeownership as a financial investment and wealth builder. Furthermore, for home buyers seeking a multigenerational space, there are often different home elements that appeal to them over traditional married couple buyers. These elements include separate but unified living spaces, and neighborhoods that appeal to a wide array of ages, the Washington Post noted. As more diverse sets of buyers have different home needs, the real estate and construction industries will likely continue to evolve to meet these needs.
In addition to changing its approach to home buying and selling, the real estate industry will also likely need to increasingly keep in mind the differing financial concerns of homeowners of the future. For example, as NBC reported, the gender pay gap means that women tend to have lower incomes that men – and often have higher income to debt ratios. Because of this inequity, single women are often less likely to be approved for mortgages than men, CS Monitor noted. The outlet also added that the lending industry is less favorable to single purchasers because of tight credit controls — and the industry might have to reframe how it approaches the issue as number of single women homeowners continues to rise. For their part, real estate brokers may need to develop specialized approaches for how they assist single women purchasers, including through helping them seek out various financing options, down payment and closing cost assistance, and other services. Moreover, real estate agents might also need to increasingly assist multigenerational families in navigating the more complex process of purchasing a home if there are multiple unmarried adult buyers.
For would-be millennial homeowners, including those who are seeking to take the leap from multigenerational living to independent homeownership, the real estate industry needs to be cognizant of the housing affordability issues faced by this generation. Notably, NAR has already taken some steps to address millennial housing affordability concerns. For example, the organization supports and advocates for student loan reform because of educational debt’s disproportional impact on millennial buyers.
Overall, as “married couple” becomes a less consistent characterization of home buyers, the real estate industry will continue to change to meet the purchasing preferences of these buyers – and will also likely further advocate for policies and practices that support them in their pursuit of homeownership. As the future of homeownership evolves, so too will the industries and policies that support it.