Millennial Generation Likely to View Home Purchases Positively
Generation X Americans, those born between 1965 and 1979, formed the largest single group of homebuyers in a recent survey conducted by the National Association of Realtors® (NAR). The generation immediately behind them, however, the so-called Millenials are already in purchase mode and promising to have significant impact on the market.
NAR's survey of homebuyers found that Gen Xers bought 31 percent of homes during the subject period - June 2011 to June 2012 - followed closely by Millenials, those born between 1980 and 2000 who bought 28 percent. This is good news as that the younger group is the second largest generation in history after the Baby Boomers, and only the oldest of them are reaching the age in which people typically buy a first home. Thus they could be poised to provide significant impetus to the housing market.
NAR found that, despite the recent downturn, homeownership matters to this young group and they have a positive attitude toward it. For example, the survey found that while eight of 10 buyers considered their recent home purchase a good financial decision, 85 percent of buyers under the age of 32 felt that way.
Purchases made by older generations understandably constituted a smaller share of the market. Eighteen percent of purchases were made by younger boomers, those born between 1955 and 1964 while older buyers - the first wave of Boomers born starting in 1946, and the Silent Generation (1925 and 1945) bought 14 percent and 10 percent respectively.
NAR's survey data is published in the inaugural 2013 National Association of Realtors® Home Buyer and Seller Generational Trends which evaluates the generational differences of recent home buyers and sellers. It notes that the median age of Millennial home buyers was 28, their median income was $66,200 and they typically bought a 1,700-square foot home costing $165,000. The typical Gen X buyer was 39 years old, had a median income of $93,100, and purchased a 2,100-square foot home costing $235,000.
The Millennials typically bought after renting (65 percent) or living with relatives or friends (22 percent) while more than half of all Boomers and Silent Generation buyers had owned a previous home. Millennials bought older homes than their elders (by about a decade) and tended to stay closer to their previous residences, usually under 10 miles. Older buyers were likely to move more than 20 miles away. Younger buyers chose urban or central cities areas more frequently than older buyers.
Millennials made more compromises with their home purchase than any other generation, often conceding on the price and size of the home, lot size, distance from job and style of home; whereas nearly half of Older Boomer and Silent Generation buyers made no compromises on their recent home purchase. The youngest group also made the smallest down payments, a median of 5 percent compared to 8 percent for Gen X buyers and 22 percent for the Silent Generation. Younger buyers who financed their home purchase most often relied on savings for their down payment whereas older buyers typically used proceeds from the sale of a primary residence.
As the age of recent buyers increases so does the rate of owning more than one home; among Millennials, 8 percent own more than one home, which could include either a vacation home or investment property; compared to 21 percent of Gen Xers, 28 percent of Younger Boomers, and 27 percent of Older Boomers, and 26 percent of the Silent Generation.
When it came the home sellers, NAR found the largest group again among Gen Xers who comprised 30 percent of recent sales followed by Younger Boomers (21 percent), Older Boomers (21 percent) and the Silent Generation (19 percent). As the age of sellers increased, the share of married and unmarried couples declined and the percentage of single female home buyers increased, from 4 percent among Millennials to more than 17 percent among Boomer and Silent Generation sellers, perhaps due to death or divorce.
While younger sellers typically moved to larger, higher priced homes, the data shows a clear trend of downsizing to smaller, less expensive homes among the Older Boomer and Silent Generations. Like older buyers, older sellers tended to move further when selling, often out of the state or region.
Typically the older the seller the longer the tenure in the home, while Millennials had been in their previous home for a median of five years, Gen Xers stayed 8 years, Younger Boomers owned their home for 11 years, Older Boomers stayed for 13 years, and the Silent Generation kept their previous home for 15 years.