What 1970s Drivers Can Teach Us About the 2026 Homebuyer

There is compelling evidence that the next wave of move-up homebuyers and remodelers will look very different from prior cycles. Our hypothesis: they will place a higher premium on fit, be less willing to compromise, and ultimately become more demanding consumers. Why? The formative experiences of first-time buyers during the extraordinary 2020 to 2025 housing market.

Formative Experiences and Changes in Consumer Behavior

Economists use the term ‘formative experiences’ to describe life events that permanently influence how people make decisions long after the original event has passed. For example:

Getting a horrible sunburn the first time you go to the beach, and a lingering reluctance to go swimming later in life.
Growing up with a beloved puppy, and being forever a ‘dog lover’ later in life.
Grandma saving old mustard jars because she grew up in the great depression, and was permanently more frugal.
Learning to drive during the 1970s fuel crisis resulted in permanent changes in transportation choices that lasted for decades.

More on that last one. Several years ago (pre-COVID), economic researchers at the NBER and Philadelphia Federal Reserve found that first time drivers, 15 to 17 years old, who learned to drive during the 1970s fuel crisis permanently shifted their transportation spending, even decades later.

All consumers experienced higher gasoline prices during the 1970s fuel crisis. However, those learning to drive for the first time experienced those conditions during a particularly impressionable period of life, resulting in permanent changes in behavior. Decades later, this group still:

Permanently drove roughly 1,000 miles less per year in adulthood versus other drivers.
More likely to choose non-auto transportation like public transit regardless of income.
Three times larger impact versus normal variability, and universally the same effect (less driving), regardless of income, demographics, etc. This was a change to human behavior for those affected.

These behavioral changes held up regardless of incomes, location, family status, etc. It was a permanent behavioral change. Interestingly, later younger cohort drivers who learned to drive after them, such as their younger siblings who learned to drive after fuel prices were normalized, resumed driving more in life. Only the first-time drivers who got hit with higher prices were permanently affected.

Fast Forward to Housing 2020 to 2025

For homeowners under 40 years old, typically first-time buyers, there is evidence that something similar occurred 2020 to 2025. These first-time buyers attempted to purchase their first home when:

Unprecedented shortage: With inventory of homes for sale per-capita had never been lower in history.**
COVID emotional toll, with numerous failed attempts to buy: Open houses would yield 30-plus offers by end of weekend, with the seller choosing one buyer and the remaining shoppers having to ‘try again’ the next weekend on another home.
Surge in prices driven by shortage of available homes, combined with shortage of materials to update older homes.
Settling for poor match. The above process drove household to purchase whatever homes they could secure rather than the home best suited to their family.
Then ‘lock-in’ from doubling of mortgage rates: If buyers later disliked their home, they were stuck due to higher mortgage rates.

Similar to 1970s first-time drivers in the fuel crisis, first-time homebuyers experienced their first attempt at buying a home during a period that was exceptionally difficult, expensive, and painful.

Poor ‘Match’ Equals Discontent and Future Moves

At its core, the 2020 to 2025 housing market presented first-time buyers with what economists call a matching problem. The challenge was not simply affording a home, but finding the right home at the right price in an environment defined by limited inventory, intense competition, and little time for deliberation.

As a result, many buyers accepted compromises they otherwise would not have considered. Much like buying a suit that fits well enough to wear, but never feels quite right.

The data confirms the problem. Zonda analysis of New York Federal Reserve microdata*** reveals that homeowners under 40 who purchased their homes after COVID are 1.4 times more likely to plan on moving within 12 months versus buyers of the same age group who purchased pre-COVID.** For higher income first-time buyers its even higher, nearly two times higher probability versus pre-COVID movers, despite the same macro picture.

The pattern is strikingly similar to what researchers observed among first-time drivers during the 1970s fuel crisis. For many first-time buyers, the COVID-era housing market appears to be a formative experience defined by scarcity, compromise, and an unusually difficult search for the right home.

What It Means

The lesson from 1970s fuel crisis was not simply that behavior changed. It was that behavior changed permanently. Drivers who learned to drive under conditions of scarcity were permanently more conservative when making transportation decisions decades later.

For housing, the long-term effects are still emerging. However, one plausible hypothesis is that COVID-era homebuyers will move less often next cycle, not because they are more satisfied, but because the process of finding and securing a home was so painful.

Having experienced the cost of compromise and scarcity firsthand, they may place a much higher premium on finding the right fit the next time around.

As a result, the industry may face a future homebuyer who is both more discerning, and statistically less willing to compromise. That’s a tougher customer, and historically the natural domain of custom builders and design-build firms. Today’s housing market is more sophisticated, but plausibly faces a more difficult buyer to get right.

The pattern here is important:

Decades after the Great Depression, my grandmother was still not willing to throw out a jar or overpay for anything. As Ben Bernanke noted, the Great Depression left lasting behavioral scars on the American psyche.
Decades after the 1970s fuel crisis, first-time drivers were still not willing to spend on auto like other generations.
The next decade will be shaped by homebuyers or remodelers, whose first experience with housing was defined by scarcity, competition, and compromise.

If the pattern holds, the next housing cycle may not simply involve different demographics. It may involve a fundamentally different consumer. One who remembers the cost of settling, places a higher value on fit, and is significantly less willing to compromise versus earlier generations.

*Severen, C., & van Benthem, A. (2021). Formative Experiences and the Price of Gasoline. NBER Working Paper No. 26091. National Bureau of Economic Research.

**There is some evidence that similar levels of housing and supply shortages occurred in post WWI US 1919 to 1920, which is excluded in our inventory analysis due to limited data.

***Zonda tabulation and calculation of New York Federal Reserve SCE microdata, specifically the proportion of households reporting a 50% or greater probability of moving within the next 12 months (a signal of their intention to move). For reference, the difference in 2025 between young high-income who moved after 2020 versus pre-2019 is significant, roughly 10 percentage points, which is roughly the same difference between expected move rate of under 40 versus 60-plus year old households. Said another way, the impact of moving versus non-moving during COVID on younger buyers is similar to the magnitude of impact of roughly 25 years of life occurring naturally as households age.

****U.S. mobility has been declining for the past 30 years. At least half the decline is from behavioral changes, with demographics driving a meaningful portion of the overall decline (older households simply move less often versus younger households). However, decline in mobility was much broader, including declines in move rates for young renter households compared to earlier generations.

Side note: Some economists have hypothesized that reduction in mobility since 1970 was also driven by an underlying slowdown in risk-taking, innovation (outside of tech), and other forms of spontaneity. For example, measures of segregation within neighborhoods has increased versus 1970s (neighborhoods are likely to be clustered with people of similar demographics, interests, educational backgrounds). Cowen, T. (2017). The complacent class: The self-defeating quest for the American dream. St. Martin’s Press.

Read the earlier iterations of this six-part series below. The insights in this article were taken from a more detailed review in Zonda’s Building Products Outlook.