The decline of the housing sector has resulted in a myriad of market conditions that were not necessarily easy to predict. Interest and appreciation rates experienced significant fluctuations, the likes of which are rarely seen. However, a new trend is gaining traction as more homebuyers are actively participating in the housing market. Despite inventory levels remaining low, some populations are becoming increasingly selective with their purchases. More specifically, older homebuyers are reluctant to compromise on acquiring their desired home.
According a survey conducted by the National Association of Realtors (NARs), approximately half of the 93,502 respondents 58 and older refused to compromise on their most recent purchase. Conversely, the same survey identified a significantly smaller population of younger homebuyers that were not willing to compromise on the purchase of their most recent property. Only 28% of young, prospective homebuyers neglected to compromise. Younger buyers were more likely to cut corners on price, lot size, distance from job and the style of home.
Perhaps even more interesting, however, was the correlation between age and willingness to compromise. The older prospective buyers get, the less willing they are to compromise. This association has been attributed to experience. When you have already purchased multiple houses, you know exactly what you like and don’t like.
“The first-time buyer is starry-eyed and has no idea what they really need. They might want a five-bedroom and never use two of them,” said Stephen Melman, director of economic services for the National Association of Home Builders. Those in their 50s “are better than most housing consumers at knowing what they want—and won’t be shy.”
Young buyers appear to be purchasing houses based on their needs, while older populations seem to base their purchases on desire. Hence; their reluctance to compromise.
Of course, a selective approach to home buying will ultimately make the process much more difficult. Without a willingness to compromise, finding the perfect home may prove difficult or even impossible. Agents have crossed paths with older buyers willing to pay considerably more than the asking price just to meet their demands.
In addition, the recent NAR survey suggests older buyers are more interested in newer homes. Trends reflect that the older a prospective buyer is, the newer they want their home to be. Older buyers are more likely to pursue the acquisition of a new home instead of wasting time searching the market for one that meets their specific criteria. They are more likely to have the financial wherewithal to do it, too—especially now, as housing markets have improved.
Millennials, on the other hand, are more likely to relegate their search to houses built around 1986. With costs more of a challenge; older houses serve as the perfect first home.
Homebuilders that cater to older populations, with a limited propensity for compromise, have experienced encouraging trends in their niche. The most recent reading of the National Association of Home Builders’ 55+ Housing Market Index was 53 in the second quarter, up 24 points from the same time last year. A reading above 50 reflects positive conditions for builders.