A report on the real estate market in the Chicago region hints at a possible trend to watch: Americans will buy fewer homes in their lifetime.
Many first-time buyers share the Joshis’ perspective that it’s smarter to find the right house to grow into than to get a toehold in the market with a starter house, only to see much of that early equity sapped by transaction costs a few years later when moving up to a larger house.
“When we started looking, I had in mind a starter house, but it was so exhausting to look that we thought, no, one and done,” says Vrushank Joshi.
There are numerous societal changes that contribute to this:
- People are getting married later and going to school longer. This means they are not buying a home in early adulthood as often and are waiting longer to purchase their first place.
- With more education, increasing student loans means it takes longer for potential owners to save money for a down payment.
- Fewer starter homes have been constructed in recent years.
- Mobility is down in recent years as Americans seem interested in staying in places for longer.
- The specter of the late 2000s housing bubble haunts possible buyers.
A system that used to rely on people starting with a smaller product and then working their way up over a lifetime may have to make some major adjustments if Americans buy fewer and different homes compared to before.