NEW YORK (MainStreet)As Millennials age into their early 30s, the typical age for a first-time home buyer, realtors and housing experts say the new crop of young buyers are postponing their entry into the housing market.
"First time home buyers are waiting longer and are older than they used to be," said Jane von Holzhausen, a seasoned real estate agent and manager at Coldwell Banker Residential Group in Avon, Conn.
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Millennials are renting longer or living at home, and when they do they spend it's in a higher bracket above a classical "starter home," von Holzhausen said on the emerging pattern of older first-time buyers.
The median age for a first-time homebuyer in the U.S. has ranged between 30 and 32 over the last 30 years, according to statistics from the National Realty Association.
The slow pace of economic recovery along with tightened credit and the staggering amount of outstanding student debt - toward $1 trillion - is packing a punch on Gen-Yers (22 - 33) who are waiting longer to pay down student debt and save for a first home.
The number of student loans borrowers is approaching 40 million nationally, including 40% of 25-year-olds, with the average balance of $25,000, according to the Federal Reserve Bank of New York.
With tightened credit, many defaulting young borrowers are no longer able to qualify loans - especially mortgages. In 2005, nearly 9% of 25- to 30-year-olds with student debt were granted a mortgage. But last year, that percentage dropped to slightly above 4%, according to a FRBNY report.
"Delinquent student loan borrowers have a very difficult time accessing credit and the share of those borrowers is greater today than in the past," said Donghoon Lee, a senior economist at the New York Fed and one of the authors of the report.
Prior to the burst of the housing bubble in 2008, most borrowers to were granted mortgages more easily - including those with a high amount of student debt.
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"In 2005, we had all these mortgage promotions with more people who should not have been buyers, " said Walt Molony, an economic spokesperson for the National Realty Association.
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The crux behind first-time home buying is household formation. Millennials are renting longer before buying, he added.
They're changing the pattern of household formation - Millennials are not only putting off buying a home, but they're choosing to have children later in life. Gen-Yers are getting married at half the rate of their parents generation, according to U.S. Census Bureau data.
"Usually that rental activity feeds into a household formation and then getting into the market and that's not happening," Molony said.
Tight credit and tight inventory in certain areas of the country are impacting first-time buyers with or without student loans from entering the housing market.
"The impact that we see right now is on credit, although some high income to college debt ratio is impacting some Millennial buyers," Molony said. "If you've been paying down your debt and you have an income, you're going to get a mortgage."
Mortgage lender Wells Fargo conducted a home ownership survey in 2012 on prospects for home ownership among different age groups. "Those who represent the Millennial generation cite their personal finances, both now and in the future as drivers of uncertainty toward homeownership," said Natalie Brown, a spokesperson for Wells Fargo Consumer Lending.
The top three reasons given for by young adults aged 22 to 33 in the survey for uncertainty include the current state of the economy and its future impact, the ability to have enough money to purchase a home and the financial security needed for affording a home long-term.
"All of that being said, more millennials are again seeing homeownership in their future, nearly two and three expect to be homeowners in the next five years," Brown said.
Connecticut real estate agent Von Holzhausen surmised the changing pattern of the new home buyers is one of postponement.
"Kids are having trouble finding a job out of school and they're putting off marriage and home purchases," she said.
--Written by Farran Powell for MainStreet
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