Homebuying and Parenthood: Rising Costs Are Driving Families to Delay Both

A new report finds that only about half as many families are buying homes like they did in the 1980s.

A new report from the National Association of Realtors has found that only 27 percent of recent homebuyers have a kid under 18 in the household. That’s a shocking drop from previous years, declining 30 percent from 2023. In 1985, 58 percent of home buyers had kids.

To put that in context, you have to look at the spiking costs to raise children. That price has blown way past what is considered “affordable.” The Department of Health and Human Services puts that amount at 7 percent of a family’s income. But many families already pay about 30 percent of their monthly income toward childcare—more than they spend on housing.

According to americanprogress.org, “since 1990, child care expenses have more than tripled, outpacing wages, groceries, and even housing.  Child care is one of the most expensive items in family budgets. The median amount parents pay has reached $800 per month, increasing to $1,100 for those who require 20 hours or more of child care each week.”

Other data from Redfin shows that the number of rental households is growing at three times the pace of homeowner households. That jibes with the NAR study. 

“Affordable housing has been at the forefront of this election cycle because so many people are struggling to see how they will ever become homeowners—especially those from younger generations, " said Redfin Senior Economist Sheharyar Bokhari. “With home prices at record highs and mortgage rates remaining elevated, renting is increasingly the only viable choice for many young people and families.”

Housing: Gray Area

Many of the other stats in the NAR report may also give public officials and builders insight into what’s going on with their local and regional market.

The average age of a homebuyer keeps rising, to 56 this year. First time homeowners now average age 38. In the 1980s, first timers were in their 20s.

The report contains dozens of other eye-opening takeaways: People are buying close to where they already live, and they’re avoiding remodeling as much as upgrading. About 31 percent are paying cash. That number, however, may include institutional investors, who account for up to 30 percent of home purchases in some markets. That housing grab may be slowing, but the market is well saturated with investor-owned properties already.

• 15% of buyers purchased a new home, and 85% of buyers purchased a previously-owned home.
• Recent buyers who purchased new homes were most often looking to avoid renovations and problems with plumbing or electricity at 42%. Buyers who purchased previously-owned homes considered them a better value at 31%.
• Detached single-family homes continued to be the most common home type for recent buyers at 75%, followed by townhouses or row houses at 7% .
• Senior-related housing remained at 19% of buyers over the age of 60 this year. 58% purchased a detached single-family home, and 52% bought in a suburb or subdivision.
• The median distance between the home that recent buyers purchased and the home they moved from was 20 miles. This is down from the 2022 report of 50 miles but remains elevated from the distance of 15 miles seen from 2018 to 2021.
• Quality of the neighborhood (59%), convenience to friends and family (45%) and overall home affordability (36%) remained the most important factors to recent home buyers when choosing a neighborhood.

What’s the Fix?

The desire for owning a home is still strong in younger generations, but families with children see their prospects slipping away. What can be done? Experts argue that housing needs to be made more affordable, but that’s not something builders can do by themselves. Land, labor, and material costs are high. Regulatory and zoning hurdles make new construction complex and time consuming. 

Oddly, the path to greater home-buying power for young generations may require those in the building industry to support progressive programs they might not normally endorse or even think about it.

These might include subsidies, after-school programs and the like to reduce family expenditures, laying the financial groundwork for a home purchase. A middle class family that can’t save the 10 percent down payment for a new home will remain in the rental category indefinitely.

Another angle is to help families that are stretched thin financially at the home-buying stage by offering them high-performance homes. Reducing energy and water bills can remove a lot of stress for families that can’t control other inflationary costs.