Stage of life impacts homeownership rates more than income – study

by Francis Monfort06 Mar 2018

A homebuyer’s stage of life plays a bigger role in the decision to buy than income, according to a new analysis of homeownership rates released by Zillow.

The study found that income does not significantly affect homeownership rates among buyers across various stages of life except for couples below 35 years of age. Zillow arrived at the conclusion despite accounting for the fact that older adults and couples do have greater earning power given higher incomes, longer time spent working, and married households with two earners.

The analysis found that married or partnered households generally have higher homeownership rates than households headed by single people. Additionally, older households usually have higher homeownership rates than younger ones.

Zillow found that there was only a small difference in the homeownership rates of older couples with dual incomes and older couples with only one earner. Although those with dual incomes earn about $44,000 more than those with only one earner, the national homeownership rate only increases by one percentage point to 82% when a couple has a second earner.

Meanwhile, the homeownership rate among households of young singles drops by one percentage point to 19% with the addition of another earner, whether a relative or a roommate, even if the household’s median income rises by about $39,000.

The story is different for married or partnered couples under 35, however. Zillow found that the homeownership rate for the group jumps 13 percentage points to 49.9% with the addition of an extra earner, which translates to $33,000 gain in their median annual income.

“There’s a clear distinction in homeownership among most of the life stage groups, indicating that people at different stages of life value homeownership differently,” Zillow Senior Economist Skylar Olsen said. “But the income factor within those groups makes little difference. Why? From this angle, whether people buy a home or rent is dominated by life stages – but what they can afford and save for is determined by income.”


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