Which Affects Home Buying More? Income or Stage of Life?
While there’s a lot in the media about high home prices and affordability, a new report indicates that home buying has more to do with the stage of life a person is in, rather than how much money they earn.
The study by Zillow was based on an analysis of homeownership rates. It concluded that, with the exception of couples under age 35, income does not play a significant role in whether or not someone purchases a home.
Older Adults and Couples Do More Home Buying
Homeownership rates are highest for older adults and those who are part of a couple, either married or partnered, the study found. But while you might think that it’s because these persons are more likely to have higher incomes, the study revealed that this doesn’t play a huge role in whether or not they buy homes.
For example, for older couples, homeownership was 82% for dual-earner households with about $44k more income, compared to 81% for single-earner households. So basically, older couples are more likely to buy homes regardless of their income level.
On the other hand, homeownership is low for young singles whether they have only one income or a dual-income from a relative or a roommate. It’s 20% for dual-earner households, just 1% higher than for the single-earner households.
What About Couples Under 35?
The only group where homeownership was significantly impacted by income was couples under age 35. Homeownership rates rose by 13% to approximately 50% when there was a second income of $33k in the budget.
What Factor Does Income Play in Home Buying?
Income affects homeownership rates in a couple of different ways. First of all, it affects how long it can take to save for the down payment to purchase a home. Secondly, income affects factors such as the type and size of the home and the location where buyers purchase.
The good news is that when people really set their mind on buying a home, they tend to find a way to do it, despite any hurdles in their way. “People will continue to break into the market when and how they can by buying cheaper homes, homes farther out, smaller homes—whatever is feasible,” according to Zillow.
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