Single young consumers forego the rent and move straight to mortgage payments.
They're young, they're single, and pretty soon, there will be more of them. Whether they're Gen Xers putting off wedding plans or the leading edge of Echo Boomers just out of college, the number of unmarried people ages 18 to 34 is slated to grow from 33 million to 38 million between next year and 2010, a 16 percent increase.
Single young adults have always had money to spend, but a growing number have lots of it. The number of unattached 18-to-24-year-olds making over $50,000 a year grew by 75 percent from 1994 to 1997, while the number of single 25-to-44-year-olds making the same amount grew by 59 percent. Six-figure earners in both categories also showed respectable growth: 38,000 singles aged 18 to 24 made over $100,000 in 1997, an increase of 65 percent over 1994, while 241,000 25-to-44-year-olds did the same, a 35 percent increase.
So what are all these young turks doing with their new-found fortunes? Even if they're not shopping for his-and-hers towels, they're ready to buy a home and start planning for the future. Singles of all ages are sheddingtheir renter images and buying homes, from apartments and condos to single famil y units.
Although the number of singles buying homes grew only 0.2 percent from 1997 to 1998, a "tremendous" 28.9 percent increase was reported the year before, according to Chicago Title Corporation's Annual Survey of Recent Home Buyers. And by next year, the traditional home buyer - a married couple with two kids - will make up less than 25 percent of first-time buyers, according to a report by marketing firm Dragonette, Inc. Single households, on the other hand, will total about 36 percent of all first-time buyers. (First-time buyers make up about 42 percent of the nation's housing market.)
In Chicago Title's 1998 survey, some metropolitan areas showed significant increases in single home buyers of all ages. San Francisco, where 55 percent of all home buyers had never been married (versus 47 percent in 1997), is one of the hot markets. In Washington, D.C., 24 percent of home buyers were singles, up 1 percent, while Denver's population of single home buyers increased from 19 percent to nearly 24 percent. One out of four buyers in Minneapolis and Miami were also single.
Basking in the glow of Silicon Valley, San Francisco's young, techno-savvy crowd is flocking to the trendy South of Market area. Mark Calabria, senior economist with the National Association of Realtors, estimates that about 20 percent of the Bay area market is scooped up by singles under age 35, about double the national average of 10.7 percent. "If you looked at the demographic profile of loft buyers in San Francisco, at least 75 percent would be under age 30 and single," says John McInerney, managing broker with TRI Coldwell Banker Real Estate in San Francisco.
"We have a lot more young professional people with disposable income buying property - and not just cheap property," says Helen Marshall, a broker with the city's Century 21 Hartford Properties. With an average selling price of $400,000 (popular lofts run from $350,000 to $800,000), homes in the area may not be cheap, but with a booming regional economy, they are affordable for young singles."There's a tremendous amount of wealth in the Bay area right now," McInerney points out.
Young bachelors aren't the only ones laying out welcome mats - single women are picking up property at the same pace as their male counterparts. In fact, single women of all ages have nearly doubled their share of the national home buying market in the last ten years, from 10 percent in 1987 to 18 percent in 1997, according to Calabria. Single men, on the other hand, accounted for 11 percent of the market in 1997, up from 7 percent ten years earlier.
In Denver, the numbers skew more toward single men in their early thirties. Single buyers in the area have shied away from condos, says Marcia Toll, a broker for the Kentwood Company at Cherry Creek in Denver, preferring to sink their money into single-family homes, which are considered a more solid investment. Average prices range from $180,000 to $280,000, she adds, but with a tight rental market, it's usually less expensive for singles to buy.
Managing the down payment seems to be no problem: Toll reports that a number of young singles put down 20 percent to 30 percent."A lot of them are professionals who have been saving for that reason, or they get part [of the down payment] from their families," she says.
With more high-tech jobs sprouting up in the suburbs of Washington, D.C., the region's economy has picked up and encouraged a host of young buyers. "Probably 50 percent of our business is first-time singles - men and women - who are tired of paying rent," says Steve Jacobson, associate broker of Brian Logan Real Estate in Washington. These young adults don't want to live a "sterile" suburban life: "They want the convenience. They want the neighborhood lifestyle. They grew up in the 'burbs and want to get away from them," he says.
Condo sales are running head-to-head with single-family homes in the area, says Dale Mattison, associate broker with Washington's Long and Foster Realtors. Homes average for about $200,000, with condos ranging from $90,000 to $25 0,000.
The biggest factor aiding young single home buyers is D.C.'s $5,000 tax credit for first-time buyers with certain income levels, says Jacobson. Depending on income, some new home buyers in the city aren't required to pay property taxes for the first five years of ownership.
Although Jacobson reports an equal split between young women and young men buying homes, he has noticed more higher-income women than men becoming first-time home buyers. Mattison estimates that about 60 percent of the young singles he's seen buying homes are women. "Women are making more money, and are becoming equally astute to the advantages of ownership," he says.
Young singles may still be a relatively small part of the overall real estate market, but there's a better chance today that your next new neighbor will be someone like one of the clients of Ruth Dickie, manager of Long and Foster's Bethesda Hamden Square office. The client, a 29-year-old former college basketball player, decided two years ago that marriage was not in her immediate future. Since then, she's adopted two children and bought a home in Kensington, Maryland.
"Twenty years ago, a single woman wouldn't have considered buying a home," Dickie says. "She would have continued renting." Now, though, nearly everyone can enjoy the life of a homeowner - even those times when the water heater dies and she's the one with a wrench in her hand.