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Single Buyers Face Hurdles as Starter Homes Dwindle

October 26, 2021

The number of one-person households in the U.S. has doubled in the last four decades. Solo households have risen from 18.2 million in 1980 to 36.1 million in 2020. Baby boomers comprise 39% of solo households, while 19% are millennials, 19% are Gen X, and 3% are Gen Z, The Wall Street Journal reports.

But the booming housing market is leaving fewer options for those who are getting into homeownership alone. The supply of entry-level housing—up to 1,400 square feet, according to Freddie Mac’s definition—is near a 50-year low.

“We’re just not building that many [smaller homes], despite what you hear about ‘tiny homes’ and that sort of thing,” Len Kiefer, deputy chief economist of Freddie Mac, told The Wall Street Journal. “There’s not that much new supply coming online, so the existing supply—which is aging—is fiercely competed over.”

Overall, the median sales price for homes purchased by single buyers was $265,000, according to the Housing Center at the American Enterprise Institute. However, the national median existing-home price was $352,800 in September, according to the National Association of REALTORS®.

Some single homeowners have been forced to move locales to buy. For example, Jonathan Morgan, a 34-year-old software engineer in Austin, Texas, told The Wall Street Journal that he felt priced out of the hot Austin market. He’s moving to Grand Rapids, Mich., where he can still work remotely for his job. The median home price in the Grand Rapids-Wyoming, Mich., metro area is $278,300. In Austin, it is $515,100.

But the homeownership struggle for singles isn’t affecting only young adults. A growing number of baby boomers are becoming sole households too, due to mortality, divorce, or separation, Kiefer says. Some of these older buyers are looking for options to downsize but are struggling to find options and also learning that their budget won’t go as far, Kiefer told The Wall Street Journal.

Single buyers are finding themselves competing for fewer small homes and are up against eager first-time home buyers as well, Kiefer adds.

Source: 
Home Prices Rise, and Single People Are Running Out of Houses to Buy,” The Wall Street Journal (Oct. 24, 2021) [Log-in required.]