By Jennifer Riner of Zillow
Are you looking to buy a home in the near future? It might be intimidating, and if you’re young or new to the real estate game, you might be wondering if it’s too soon to search for your first real estate purchase. Whether you’re financially ready or not, it’s never too early to begin researching market trends.
First, consider the shift in home buyer demographics over the past 20 years, and what some buyers are looking for in new construction homes.
New Home Buyer Demographics
Over the years, the typical first-time home buyer has changed slightly, transforming from a younger, married couple, who rents for just a few years, to a slightly older, single person with more experience in being a renter.
According to a Zillow analysis of first-time home buyer characteristics, the average home buyer today is 33-years-old, compared to 30-years-old in the late ’80s. Additionally, first-time buyers are renting 6 years before searching for homes to purchase, compared to just 4.4 years a few decades ago.
One reason today’s buyers might be renting longer is because they need more time to save for larger down payments. Zillow’s research team found that first-time buyers spend 2.6 times their incomes on starter homes, which cost around $140,328 at closing. In the late ’80s, starter homes only cost 1.9 times the median income.
While 52 percent of first-time buyers were married in the late ‘80s, only 40 percent of first-time home buyers are married now. Buying a home on just one income poses more financial risk, but allows more independence in choosing property specifics and makes the house hunting process considerably simpler – just ask any married couple.
The tiny home craze is still going strong in its niche market, but many Americans looking for new construction homes still need their space. In fact, the average new home has increased in size by 24 percent over the past 15 years. New construction homes have gone from a median of roughly 2,100 square feet in 1999 to 2,600 square feet at the end of 2014, and they tend to have more bedrooms and bathrooms than their previous models.
Although sizes have increased, new builders have become savvier with exterior square footage. The median lot size declined 10 percent since the late 1990s, from 9,600 square feet in 1999 to 8,600 square feet in at the end of 2014. Although builders began increasing the ratio of structure to lot area – or putting larger structures on smaller lots – of homes in the years prior to the recession, new construction slowed slightly when the housing market crashed. However, since the real estate market bounced back, the trend of building bigger dwellings on smaller properties accelerated rapidly in recent years.
In the early 2000s, the average new construction home had three feet of yard space per one foot of finished interior space. By the end of 2014, the average new construction home had less than two feet of yard space for ever one foot of finished interior space. However, some builders are also their priorities toward condominiums and townhomes, which could also cause an inherent increase in compactness of yard space for the standard new construction property.
Whether you’re the typical new buyer, or you’re a one-of-a-kind house hunter who broke the mold, making the decision to invest in real estate is a life-changing decision with considerable investment opportunity for the future.
**Jennifer Riner writes about rentals, home improvement and design for Zillow Blog.