The share of young homebuyers under the age of 30 has dropped below pre-pandemic levels as the affordability crisis prices them out of the market, according to a survey by CoreLogic.
Young homebuyers took advantage of historically low-interest rates in 2020, accounting for 22% of homebuyers, a record high for the age group.
But the share fell back to pre-pandemic levels in 2021 and further declined at the beginning of 2022.
Controlled for seasonality, the share of young homebuyers in January and February 2022 is at a ten-year low.
Markets in the Midwest have a higher portion of young homebuyers than coastal areas. More affordable metros have the highest share as young homebuyers – who typically have lower incomes and less credit than older homebuyers – are priced out of more expensive destinations.
Provo, UT, had the largest proportion of young homebuyers applying for mortgages at 37%, followed by Ogden, UT (35%), Grand Rapids, MI (34%), Des Moines, IA (34%), Pittsburgh (32%), and Buffalo, NY (32%).
North Port, FL, saw the lowest share at 10%, followed by Cape Coral, FL (11%), Deltona, FL (13%), Oxnard, CA (15%), and Miami (15%).
Mortgage rates jumped to an average of 4.67% last week and are slated to keep rising this year. Home prices continue rising as well, despite predictions that the market might cool this year.
In February, the preliminary national year-over-year home price appreciation rate was 17%, up from 16.4% in January and 11.8% from the year prior.
“The reality is that given the seller’s market, the rampant seller’s market that we have, that sees no sign of abating, every house that gets put on the market sells,” said AEI Housing Center Senior Fellow and Director Edward Pinto.
“How high can the prices go? That is the question,” Pinto added.
Both of these factors significantly impact young and lower-income homebuyers.