Rising prices, strict loans, need for flexibility cause more to rent.
When it comes to home buying, fewer people are going it alone.
The percentage of homes purchased by single buyers across the country has fallen 10 percentage points since 2006, according to Redfin, a national real estate company. The drop comes despite an increase in the number of people who live alone.
“This goes completely opposite of demographic trends,” Redfin analyst Tommy Unger said. “This is really unexpected.”
But the trend is a reflection of a broad economic and cultural shift. Rising home prices and more stringent mortgage rules are making it more difficult for singles to get a mortgage on their own. At the same time, there’s a general unease about the strength of the economic recovery and the stability of the jobs market, changing the way many Americans view homeownership.
“Even though I’m eligible to buy, it’s hard for me to say that I’d be willing to go another $150,000 to $200,000 into debt just to get a home,” said Kelly Jon Meath, a 28-year-old computer programmer who has the income and credit to buy a house, but decided to wait after a brief hunt.
Instead, he’ll live with his parents in East Bethel rent-free for a couple of years until he can save enough to pay off more than $100,000 in student loans.
Meath and other echo boomers have come of age at a time of high unemployment rates for young people, forcing them to live with their parents or friends even if they’ve landed a job or graduated from college.
Other singles prefer to rent because they want the amenities and flexibility.
“In the past, it might have made sense that someone who just moved out of their parents’ house would buy their own house,” said Susan Brower, Minnesota state demographer. “With the shakier beginnings that these young people have, that just might not be in the plans.”
State census data from 2011 show that there were far more people living alone in Minnesota than in 2000, and that trend is expected to continue.
Lawrence Yun, chief economist for the National Association of Realtors, said singles buying homes face more restrictive mortgage lending standards than dual-income households, which are more likely to have higher credit scores. Many of these solo buyers are first-time buyers, who represented just 38 percent of all sales this year, a slight decline compared with last year.
Yun said the decline in single home buyers and first-time buyers has implications for the broader market because those buyers help drive sales.
“Historically, first-time buyers are instrumental in housing recoveries because they help existing homeowners sell and make a trade,” he said.
This shift has caused a decline in the homeownership rate across the country and a growing interest in renting.
Erik Miller, for example, is an echo boomer with a well-paying job as a pharmaceutical contract negotiator, but he opted to rent rather than buy after a recent house-hunting excursion.
“Flexibility is so much more important for my generation, and that’s tied directly to jobs,” Miller said. “My generation is not like our parents’ generation when they had one or two jobs their whole lifetime. My generation is definitely willing to say, ‘Let’s go try this job or go live somewhere else.’ ”