Yesterday morning, my dad sent me the above chart from Apollo and said, "frightening, do you have one for Canada?" In 2010, the median age (not mean) of all US homebuyers was 39 years old. Today, it is 59 years old. And it has jumped significantly since the start of the pandemic.

The obvious explanation, and long-term trend line, is that housing continues to become more expensive relative to incomes, so it is taking longer for people to save up and afford to buy.

But "first-time buyers waiting longer" can't be the only reason, because homeownership is typically a life-cycle behavior. If you're in your 60s and you still haven't made the decision to buy a home, the probability is low that you will then become a first-time buyer.

As of this month, the share of first-time homebuyers in the US dropped to a record low of 21% and the median age was 40. What this suggests is that the above chart must also be the result of a compositional change in buyers.

Wealthy older people must be buying vacation homes, retirement homes, and/or relocating (maybe for better weather and maybe for lower taxes). Combine this with fewer first-time buyers (and I'm sure some other factors), and you get the above chart.

So what about Canada?

I couldn't find an exact equivalent chart, but I did find this Bank of Canada note from 2022.

As of 2021, first-time buyers still accounted for roughly half of all home purchases in Canada. The rest were repeat buyers, and the smallest percentage were investors, which includes people buying a property as an investment or buying a property to live in while at the same time converting an existing residence into an investment property.

The median age for a first-time buyer was 36 years and the average age for all other buyers was 50 years. If we assume that this split is roughly 50/50, based on the above chart, then we get to an average homebuyer age somewhere around 43 years old. Intuitively, this seems at least directionally right.

(Note, this data is from 2021, which misses most of the pandemic period.)

Canada has a much higher percentage of first-time buyers driving the market. Canada does not have the same wealth inequality as the US. The 55+ age group in the US owns somewhere around 71% of all housing wealth and 69% of all stocks/equity funds.

And, Canadians tend to be less mobile than the US population within the country. Canada doesn't have warm, low-tax provinces attracting older rich people (though I would support us having one or two somehow).

In summary: You're right, dad, it is a frightening trend line.

Cover photo by Valeriia Neganova on Unsplash