According to a national profile of homebuyers and sellers by the National Association of Realtors (NAR), American homebuyers are Whiter, older and wealthier.
The New York Times reports the NAR added first-time homebuyers account for the smallest share of the market for the first time in four decades. According to the NAR, White homebuyers account for 88 percent of home sales during the survey, a six percent increase from the same period in 2021 and the highest level since the late 1990s.
The findings validate the struggles younger Americans, especially those who have low to moderate incomes have had when trying to purchase a home for the first time. The U.S. housing market is deepening racial and generational disparities and the consequences could be dire in the future.
Homeownership is still one of the most tried and true ways to build wealth in the U.S. Even if a home’s value remains flat, it provides stability and can be used as collateral to take out loans, pay for a child’s college and more.
For Black Americans being locked out of homebuying typically meant redlining and racism in the banking and real estate industries.
Things have been made worse by the Federal Reserve increasing interest rates above 7% which has eliminated what little power first-time homebuyers had. Additionally, there is a massive shortage of homes in the U.S. today which has led to bidding wars and increased home prices significantly.
“This is a feedback mechanism that can potentially supercharge wealth inequality in our economy,” said Austin Clemens, the director of economic measurement policy at the Washington Center for Equitable Growth, told the Times. “It’s hitting younger people, it’s hitting lower-income people. And we also find that this is hitting Hispanic and Black households especially hard.”
Historically, first-time homebuyers made up about 40% of the U.S. Housing market, however, that percentage fell to 26 percent during the 12-month survey from July 2021 through June 2022, the lowest level since the NAR began tracking such data in 1981. Additionally, the median age for a first-time homebuyer has risen to 36, the oldest age it has been since 1981.
Black and Asian Americans account for less than 6% of the U.S. housing market as their share in the market has fallen in the last year. Hispanic homeowners accounted for 8% of the market.
“It’s staggering what someone can lose out on when it comes to housing wealth,” Jessica Lautz, the vice president of demographics and behavioral insights at the National Association of Realtors, adding that a typical homeowner has gained about $210,000 in equity over the past decade.