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50 ways the housing market has changed in the last 50 years

  • 50 ways the housing market has changed in the last 50 years

    The housing market has always been one good indicator of the overall strength of any developed economy. Representing about 15 to 18% of the United States' gross domestic product, its relative strength or weakness is a touchstone for investors and traders. Over the last 50 years, beginning with the post-war boom, the market has changed dramatically. Among other things, costs have fluctuated, mortgages have become more regulated, buyers have become older, and down payments have shrunk.

    Stacker has rounded up 50 ways that the housing market has changed over the last 50 years. Using data from a variety of sources, like the Pew Research Center, U.S. Census findings, and real estate databases like Zillow, Stacker explored some of the biggest differences between today's marketplace and that of past generations.

    Read on to find out why buying a home has become so much more difficult—and what the odds are that the U.S. will experience another housing bubble burst in the next several years.

    You may also like: States where people spend most of their paycheck on housing

  • Older first-time buyers

    In the 1970s, the average first-time home buyer was 30.6. Today the average age is 32 years old. The shift in age may seem marginal, but it's due in part to the shifting financial situation of millennials, many of whom carry staggering student debt.

  • Family home

    Many millennials aren't buying their first home with a family in mind, either. In 1985 (the first year data is available) 52% of first-time buyers were married. In 2016, only 40% of first-time buyers were married, marking a sharp decline in the number of family homes vs. starter homes being sold.

  • Today's buyers are spending more

    First-time home buyers are spending much more today than they were 50 years ago, according to a study done by Zillow. In 1970, the average cost of a first home was $87,300. In 2017 it was $190,000, an increase of more than $100,000 (not taking into account the cost of inflation).

  • Cost vs. income

    The increase in price also marks a jump in the percentage of income first-time buyers are spending. The same Zillow study reports that in 1970, first-time buyers were spending 1.7x their annual income—an average of almost $53,000. In 2013, they were spending 2.6x their annual income, which only jumped to $54,000.

  • Americans are renting longer

    First-time buyers in 1970 rented an average of 2.6 years before buying their first home. In 2013, the same group was renting an average of six years before making a down payment. It's possible that the massive amount of student debt the average first-time buyer is carrying ($29,000) is causing the delay in purchase, as they struggle to get their financial lives in order.

  • First-time buyer market share

    Finally, first-time buyers make up a smaller portion of the housing market now than they did 40 years ago. In 1981, the National Association of Realtors conducted their first profile of home buyers and sellers survey. According to their data, first-time buyers accounted for 39% of the housing market; in 2017 they only held a 34% share.

  • Down payment trends

    Generally speaking, down payments have been on a downward slope over the past 50 years. In 1989, a first-time buyer paid an average of 10% while a repeat buyer was on the hook for 23%. The lowest down payment for first-time buyers on record was 2% in 2005, and 13% for repeat buyers in 2012. As of 2016, the average down payment is 6% for first-time buyers and 13–14% for repeat buyers.

  • Median average house size

    While down payments have gone down, house sizes have been on the rise. In 1970, the average floor area of a new single-family home was 1,500 square feet. In 2014, that number had jumped to 2,657 square feet, giving families more than 1,100 more square feet in which to live, work, and play.

  • Single-family homes increasingly skew bigger

    The Joint Center for Housing Studies at Harvard University also found that single-family home sizes have skewed bigger over the past several years. Small single family homes (those under 1,800 square feet) accounted for 37% of completions in 1999 and only 21% of completions in 2015. Meanwhile, completion of large homes (those over 3,000 square feet) doubled, from 17% in 1999 to 30% in 2015.

  • Number of starter homes

    In the 1950s and ‘60s, the majority of the homes on the market were starter homes, in large part because many of them were built with the backing of various government financing programs that lowered costs. Today, the number of starter homes on the market is decreasing an average of 17% each year, which adds just another hurdle for first-time buyers.

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