Buyers come from a variety of living arrangements before purchasing a home. Some rented the space they end up purchasing, others owned their previous residence, and others lived with parents or relatives before buying.
Since 1989 the Profile of Home Buyers and Sellers has collected data on where buyers were living before buying their home. Among first-time home buyers, about three-quarters rented an apartment or house since 2003. Before 2003, it was even more common for first-time buyers to rent before buying—eight in 10 did so. One interesting trend emerges among first time buyers over the last 26 years. It became increasingly common for a first-time buyer to move into homeownership after living with a parent, relative, or friends’ home. In 1993, just 12 percent of first-time buyers moved from a relative/friend’s home into homeownership but from 2010 through 2015 that share rose to 19 percent of buyers (a high of 21 percent in 2010). Successful home buyers know, it’s a smart financial move to save their downpayment especially while living in a situation where they may not have to pay rent.
Among repeat buyers the trendline data tells a different story. More repeat buyers rented prior to buying than in the past. In 2015, the data had a new high of 27 percent of repeat buyers renting before buying their home. Sellers who had a distressed property in the past needed to rent before they could purchase another home. The increase in renting may have occurred as sellers waited during housing market uncertainty to purchase another home and tight inventory drew out that process until they were able to find the ideal home to purchase. While the trendline has steadily increased from 17 percent in 2006, the lowest share of repeat buyers renting before buying was in 1989 at 10 percent. While there is an increased share of first-time buyers who lived with relatives/friends before buying, this has also increased among repeat buyers. From 2011 to 2015, the share of repeat buyers who lived with a relative before buying was six percent, which doubled from three percent in 1993.
To follow along with this series as we discuss the findings of 35 years’ worth of Profile data, check out the hashtag #NARHBSat35 on your social channels. NAR Research will be releasing trend line data since 1981 to celebrate 35 years of home buyer and seller demographic research.
Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission.