Economic Summit on Housing

January 2025 Industry Update

Instructor: Dr. Jessica Lautz, Deputy Chief Economist, National Association of REALTORS®

 

1. The Housing Market Divide:

Homeowners are gaining significant equity, while first-time home buyers face record-low market participation due to rising costs and limited inventory.

2. Housing Inventory Challenges:

Inventory levels remain critically low, contributing to increasing home prices. Builders are reluctant to construct new homes due to high borrowing costs.

3. Rising First-Time Home Buyer Age:

The median age of first-time home buyers has risen to 38, reflecting affordability challenges and delayed market entry for young adults.

4. The Lock-In Effect:

Many homeowners with mortgage rates below 4% are hesitant to sell, further limiting housing supply despite increased demand.

5. Generational Housing Trends:

Millennials, the largest generational cohort, face barriers to homeownership, while Baby Boomers are aging in place, limiting the expected transfer of homes to younger generations.

6. Multigenerational and Alternative Housing Trends:

Economic pressures, elder care, and childcare costs drive a rise in multigenerational households and creative living arrangements like unmarried couples or shared ownership among friends.

7. Shift in Housing Priorities:

Proximity to friends and family has become a top priority for home buyers, signaling changing lifestyle values post-pandemic.

8. Homeownership Wealth Gap:

Wealth disparities persist, with minority homeownership rates lagging behind white households. However, Hispanic and Asian households have seen notable homeownership gains in recent years.

9. Pet Influence on Housing Decisions:

Pet ownership is a significant factor for 16% of home buyers, impacting housing preferences such as yards and pet-friendly features.

10. Economic and Community Impact of Homeownership:

Homeownership substantially contributes to individual wealth accumulation ($415,000 vs. $10,000 for renters) and generates $85,000 in local economic impact per transaction.