If your idea of a first-time home buyer is a young shopper eager to fulfill the American dream but worried about getting a mortgage, think again. Nearly a third (32.5%) of today’s first-timer buyers are 40 and older, and while they might be considered late bloomers when it comes to homeownership, they have a ton of buying power. According to the Zillow Group Consumer Housing Trend Report 2018, they’re confident about their finances and more likely to pay with cash for their homes.
Using data from Zillow Group research and the Zillow Group Report, let’s look at how older first-time home buyers are different.
They make less but aren’t worried about qualifying
Although over-40 first-time home buyers bring home less (they have a median household income of $57,500) than younger first-time home buyers ($72,500), they don’t fret about getting a home loan. According to the Zillow Group Report, less than a quarter (22.4%) of older first-time home buyers say they are very concerned about qualifying for a mortgage. At the end of the day, only 21.9% of these older buyers are denied before qualifying for a mortgage compared to more than a third (35.5%) of first-time home buyers under 40.
Older first-time home buyers pay cash
More than 1 in 5 of these buyers (22.9%) pay cash for their home versus 11.7% of younger first-time home buyers who do the same. Some older first-time home buyers might have delayed the purchase because they didn’t want to be tied to a mortgage, or they wanted the option of moving more frequently. Others might have been waiting to save up a bigger down payment. Where younger first-time home buyers often use gifts from family and friends to make a down payment, about 60% of older first-time buyers use a single source (usually their savings) to fund their down payment.
They buy smaller homes and stay within budget
When they make the leap, first-time home buyers over 40 opt for more modest homes than their younger counterparts. The older buyer’s starter home has 1,931 square feet, 3.1 bedrooms and 2.7 bathrooms versus the younger buyer whose first home has 2,000 square feet, 3.2 bedrooms and 3.5 bathrooms.
Perhaps due to the modesty of their first home, less than a fifth (19.9%) of older first-time home buyers go over budget compared to more than a quarter (27.4%) of younger first-time buyers. Staying on budget might also be due to location as these older buyers are less likely to buy urban homes than younger buyers.
Older first-time home buyers are likely to live alone
While most first-time home buyers of any age have partners, older first-time home buyers are more likely to be single by way of separation, divorce or death of a spouse (14.9% compared to 1.2% of first-time home buyers under 40). These older buyers are also less likely to have children under 18 in the home: 48.1% versus 59.9% of younger first-time home buyers.
Confident in their finances and lifestyle, older first-time home buyers might be a potential untapped market for new construction homes. Rethink your marketing to reach these buyers and attract more of them to your homes.
Learn more about the buyer journey by visiting the Zillow New Construction Resource Center. To learn more about how you can leverage Zillow Group’s industry-leading data to market your homes online, visit our advertising page.