Thirty years ago in the mid 1980s, our country was embroiled in the Iran-Contra affair, mourning the loss of the Space Shuttle Challenger, following celebrities like Boy George and Mr. T, and Wozniak and Jobs had just rolled out the Apple IIgs. Forty years ago in the 1970s, we were wearing ridiculous clothes as we danced to disco (but not me!), Presiden Nixon resigned after the Watergate scandal, and our country was recovering from the Vietnam War - and yes, we were eating TV Dinners while watching it all on our black and white televisions.
The housing and real estate market was far different in the 1970s and 1980s, too. Here are 15 trends in real estate over the last 30 and 40 years:
1. First-time buyer rates have dropped
First-time buyers now make up only 32% of the home buying market. That’s the lowest share since 1987 when first-time buyers only reached 30% of buyers (and mortgage interest rates reached 21%!). Just how low is that? For context, the first-time homebuyer rate rates reach a high of 50% by 2010, though the average rate is around 39% over the last several decades. One reason for the low total first-time buyer rate is that Millenials first-time home purchases are only at 34.1%, while younger buyers usually make up the lion’s share of these new buyers.
2. Homeownership rates are also down
Home ownership rates bottomed out at 62.9% in Q2 of 2016, a low since the 1960s. In fact, even with 20% or more down payments, standard 30-year fixed loans and fewer flexible loan and credit options, past generations have owned homes at rates commonly in the 64-67% range. Homeownership did peak at 69.4% in 2004 with ridiculously loose lending standards (i.e. subprime) and booming values, but sunk like a stone after the bubble burst. These days, 37 million households in the U.S. are renting instead of owning their own home, a figure that roughly works out to 1 in every 3 households.
3. Houses are much bigger now (but that trend has slowed)
Just how much has our preference for bigger homes grown over the generations? In 1950 there was an average of 290 sq ft per person in the American household. These days each person has about 924 sq ft in an American household! There’s no doubt that the size of homes has risen precipitously in the past few decades, but that trend started to reverse after peaking with the real estate boom of the mid-2000s, as buyers now prefer a slightly smaller home but with great amenities and features.
4. What’s old is new with multi-generational housing
Back in the 1950s, 60s and 70s, it wasn’t uncommon for several generations of families to live under one roof, with parents and grandparents living with their adult children as they aged, mostly because there were few other living and care options and out of economic necessity. That trend declined in the 90s and 2000s as our economy boomed, homeownership became easier and modernization of our society led to less of an emphasis on traditional family dynamics.
But multi-generational housing is back and in a big way. In fact, these days, 13% of all homes are purchased by multigenerational households. Why are multiple generations in the same family buying a home together? Here are the top reported reasons:
24% Cost savings
23% Adult children moving back in
18% Caretaking for aging parents
10% Spending more time with aging parents
As you can see, there are a host of reasons for multi-generational housing, including the rapidly growing aging population that need more help and care, but also adult children who are saddled with student loan debt so move back in at home until they find a good job and get on their feet.
5. All the single ladies (are now buying homes)
It’s not just married couples buying homes anymore! Forty, thirty and even twenty years ago, it was almost unheard of to see a young single professional woman buy her own home. But we’ve come a long way, baby, and in ’16, unmarried female homebuyers are one of the fastest growing demographics. Now, married couples constitute only 67% of all homebuyers, followed by single females at 15%. That number is especially significant if we look at the fact that their cohort single males make up only 9% of homebuyers, and single women are even buying homes at a rate more than twice as much as unmarried couples (7%).
6. Technology rules
Obviously, in the 1970s and 80s the most technology home buyers and sellers, and real estate agents used was a rotary telephone and a copy machine. Veteran realtors will remember the days not so long ago where real estate books were dropped off weekly instead of home searches taking place online. But these days, just about everything in real estate (as in business) is driven by technology. Consider that as recently as 1995, only 2% of buyers used the internet during their home search, but by 2005 that number jumped up to 75% of buyers, and now sits at 90%.
76% of buyers visit a home after first finding it through an internet search.
43% of buyers looked for properties online as the first step in the process.
89% used the internet throughout their home search.
78% visited more than 3 sites prior to taking action on a real estate site.
Home shoppers aren’t even taking the time to sit down in front of their desktop computers anymore to do these searches, as the majority of online searches take place from a smart phone or mobile device.
7. The role of Realtors has shifted - but is just as important as ever
Despite this increase in technology, both buyers and sellers continue to seek out real estate agents to buy to sell their homes. In fact, the role of realtors has only increased and become more vital in today’s technology and information-crowded world, and increased emphasis on disclosures, excessive paperwork, litigation, insurance, regulations, etc. only make real estate agents more important.
In fact, homebuyers may be looking for homes online now, but they still use agents to set up showings, suggest other homes, and represent them throughout the buying process.
The top six sources for home searches are now:
- Online websites
- Real estate agent
- Mobile website or app
- Mobile search engine
- Yard sign
- Open house
Likewise, sellers are using a realtor to sell their home more than ever. In 1991, about 19 percent of all homes were sold as FSBOs, or For Sale By Owner. But that rate dropped steadily to 13 percent by 2001, 9% by 2010, and now at a 30-year low of 8%.
Look for part two of this blog coming soon!