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Be Nice to Grandma

Millennial buyers are pursuing broad ways to reduce student debt.

July - August
2019

First-time buyers have not fully returned to the market. So far in 2019, they’ve accounted for only 31% of all home sales, well below the historic market share of around 40%. That’s why home sales are still running at an annualized pace of 5 million, essentially unchanged since the year 2000 even though the U.S. population has grown by 45 million and the number of households by 20 million.

Though affordability has been hurt in recent years by fast-rising home prices, it takes a smaller share of monthly income to own these days than it did two decades ago, when 30-year mortgage rates were in the 8% range.

There are several reasons first-time buyers are struggling to get into the market. Student debt has tripled over the past decade; starter home listings are in short supply because homebuilders have focused on expensive homes; many affordably priced condos are not FHA-certified; and credit score requirements to obtain a mortgage are tighter than historic norms. 

As the National Association of REALTORS® works to ensure access to mortgage credit for all qualified Americans, individuals can position themselves for homeownership. For example, military veterans continue to benefit from the loan guaranty program that started 75 years ago. For some in college today, a “gap year” of military service or any full-time job could reduce their student debt. 

Then there’s family. NAR research shows that a third of recent first-time buyers received down payment assistance from family members, and that share is likely to grow. Many of those who lived through the Great Depression, or heard their parents’ survival stories, have benefited from decades of careful wealth accumulation. The average net worth of those aged 75 and over stands at $264,800. The lesson for millennials: Be nice to grandma and grandpa. They just might offer the boost the next generation needs to become homeowners.

Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®

Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1.3 million REALTOR® members.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them the Blue Chip Council and the Wall Street Journal Forecasting Survey. He also participates in the Industrial Economists Discussion Group at the Joint Center for Housing Studies of Harvard University. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. Dr. Yun has appeared as a guest on CSPAN’s Washington Journal and is a regular guest columnist on the Forbes website and The Hill, an “inside the beltway” publication on public affairs.

Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.

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