Currently, the largest group of buyers are the Generation X (born between 1965-1979) which comprise 31% of the marketplace. But they are closely followed by the Millennials, sometimes called Generation Y (born between 1980 and 2000) which make up 28% of the marketplace.
Out of all of the age groups for both buyers and sellers, more than 8 out of 10 people considered a home purchase a good investment for the future. But for younger buyers under the age of 32, that percentage rose to more than 85%.
Paul Bishop, NAR vice president of research, parrots their sentiments when he said, “Homeownership is an investment in your future, and is how many younger Americans begin to accumulate wealth.” He continued on to say, “The oldest of the Millennial generation are now entering the years in which people typically buy a first home, and despite the recent downturn, homeownership still matters to them. The sheer size of the Millennial generation, the largest in history after the Baby Boomers, is expected to give a powerful boost to long-run housing demand, although in the short-term mortgage accessibility and student loan debt repayment remain challenges.”Boy, can I relate to all of that! With most of my friends lying in the “late Gen X to early Millennial” crowd, I think myself (and many like me) can feel the aches of wanting a home and the pains of getting past student loan debt in order to get it. But there is definitely an optimism a home seems to bring. It’s a way to build equity–and a tool most of see as the “next chapter of life.” I think that most people in my age group are learning to be more prudent with our money. We have had the debt of high student loans, we’ve seen the damage high credit card debt can havoc, and the pitfalls prior generations have faced when getting in over their heads with their mortgages. I suspect–and this is just personal observation–that Gen Xers and Millennials homeowners are more concerned with not repeating past mistakes by building equity in their homes rather than borrowing against it.
Here’s a profile of the millennial and Generation X home buyers on a national scale, as told by the NAR study.
Millennial Home Buyers
Median Millennial Age: 28 years old
Median income: $66,200 a year
Typically bought: $1,700 sq ft home for $165,000
Median downpayment: 5%
Gen X Home Buyers
Median Gen X Age: 39 years old
Median income: $93,100 a year
Typically bought: 2,100 sq ft home for $235,000
Median downpayment: 8%
- Typical prior living arrangement: 65% rented an apartment. 22% lived with family.
- Bought homes with an average age of 1986. Older generations preferred newly built.
- Typically stayed within 10 miles of their previous residence.
- Are more likely to buy in a city or urban area. 21% of Millennials purchased in urban locations–in comparison to only 13% of Older Boomers or the Silent Generation.
- Most commonly cited the reason to buy as “the desire to own a home of their own.”
- Most commonly cited reasons for picking a neighborhood: convenience to jobs, affordability, quality of schools.
- Younger buyers preferred less commuting costs to be green versus energy efficiency of the home itself.
- Millennials make more compromises than any other generation. From lot size to square footage to price, Millennials compromised on their wish list–whereas more than half of older buyers did not.
- 8% of Millennials own a second property (either vacation or investment). 21% of Gen Xers did.
- Younger buyers relied more on savings as a downpayment.
- Younger buyers surprisingly had an easier time with the mortgage application and approval process than older generations.
- Gen Xers are the largest group of sellers, making up 30% of the market.
- Younger sellers tend to cite reasons for selling their home as job relocation or to upgrade to a larger home.
- The needs of the Millennial are different than past generations for what they want out of a real estate agent. Millennials look more for help understanding the home buying process because more Millennials are new to it. Good for me to know! Luckily, one of my specialties is first time home buyers!
For more information, the full article can be found here.
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