Together, Black and Asian/Pacific Islander buyers accounted for just 5 percent of all home sales, as their shares in the market dwindled in the survey year compared to the previous year. Latino and Hispanic buyers accounted for 8 percent during that period, according to the nationwide survey of 4,900 recent buyers of primary residences.
The shift comes as a historic shortage of available homes contributed to a stratospheric rise in home prices, leading to bidding wars, further driving up prices. The two-year run cooled as mortgage rates started climbing, rising above 7 percent by October, doubling in nine months. For many first-time buyers, soaring interest rates delivered a final blow, closing the door on ownership for the foreseeable future, as home sales stall amid the rising rates.
“It’s staggering what someone can lose out on when it comes to housing wealth,” said Jessica Lautz, the vice president of demographics and behavioral insights at the National Association of Realtors, adding that a typical homeowner has gained about $210,000 in equity over the past decade.
About 27 percent of repeat buyers paid all cash for their homes during the period of the survey, up from 17 percent a year earlier. By contrast, only 3 percent of first-time buyers paid in cash during the survey year.
Added to that, whatever savings first-time buyers brought to the table for a down payment and closing costs was dwarfed by a rapid rise home values, which jumped by double digit percent increases for two years. Unlike repeat home buyers, many first-time buyers spent the last two years at the mercy of an unforgiving rental market, where rents jumped by almost 18 percent over the course of 2021, according to Apartment List, further cutting into their ability to save.
Older buyers are now dominating the housing market. People from the ages of 55 to 74 accounted for 42 percent of home buyers, while the share of people from the ages of 25 to 34 accounted for only 14 percent of buyers during the survey year, a 10 percent drop from the same time period a year earlier. The rise in the age of first-time buyers ends decades of stability where they averaged around 30 to 32, according to the survey.