What’s influencing generational real estate decisions?
As home buyers and sellers continue to age and advance through various stages of their lives and careers, research from the National Association of REALTORS® sheds light on the factors influencing their decision making when it comes to buying and selling real estate.
Younger Millennials: New on the Home Buying Scene
This year, the study divided Millennials into younger and older groups with Younger Millennials accounting for 11% of home buyers. As the newcomers, it’s no surprise that 86% of Younger Millennials were first-time buyers. Affordability impacted this group more than any other generation, with Younger Millennials financing their home purchases 95% to 100%, more than any other generation. And when a down payment was made, 87% was sourced from their savings (also higher than any other group). 61% of Younger Millennials said they were delayed by their student loan debt when it came to purchasing a home.
Sixty percent of this group purchased for the simple desire to own their own home, which is no surprise as 58% of Younger Millennials were renters prior to buying. While children weren’t a key deciding factor for Younger Millennials since 72% have no children living at home, the most important feature considered was low commuting costs. They mainly bought:
- The smallest and lowest priced single detached homes at a median of 1,600 square feet and $177,000
- Previously owned homes
One of the most encouraging stats for real estate pros? Younger Millennials were the most likely to use a real estate agent to help them in their home buying process at 92%.
Pro tip: We’ve made it easy to demonstrate your expertise to this young group of buyers. Check out this infographic to help them navigate the hidden expenses of purchasing a home.
Older Millennials: Coming of Age
For the sixth consecutive year, Older Millennials dominated the home buying market making up 26%. They’re becoming more “traditional” in their reasons for buying with marriage and children as top considerations. 69% of older Millennials were married couples and 58% had children under the age of 18 living at home.
Older Millennials were the second most likely to buy in the suburbs or a subdivision at 53%. They had a median household income of $101,200 purchased homes at a median home price of $274,000. This generation of buyers purchased larger and older homes at a median of 1,900 square feet and a median year of 1984.
What’s one of the most important buying factors to the Older Millennial group? Commuting costs, with many buying a home close to their previous residence. Despite 59% citing the weight of their student loans and 21% being rejected by lenders due to their debt-to-income ratio, they are much more motivated to seek out homeownership and take on the lion’s share of mortgages compared to any other generation.
Pro tip: Working with this generation of buyers is inevitable.
Generation X: Family First
Generation X were the second largest group of home buyers at 24%, down two percent since the previous report. This generation is still in their peak earning years, with household income at $111,100, so it’s no secret why this group also purchased the most expensive and largest homes among all buyers, with a $277,800 median home price and 2,100 average square footage. When purchasing, heating and cooling costs were the most important feature to this group at 35%.
Generation X were the most likely to purchase a multi-generational home, at 16%, with their aging children and parents being their top motivators. Fifty-two percent stated their children over 18 never left home or were moving back home and 28% purchased a multi-generational home to care for their aging parents. They were also the largest purchasers of detached single-family homes at 88%.
Pro tip: Fourteen percent of this generation find social media activity to be important.
Younger Boomers: Single Female Buyers on the Rise
Younger Boomers made up 18% of all home buyers and one in four of those purchasers was a single female buyer, up 4% since the previous report. Younger Boomers purchased for an array of reasons such as:
- Desire to own a home of their own (17%)
- Job-relocation (12%)
- Close proximity to friends, family and relatives (10%)
Like Generation X, this group was also very interested in multi-generational homes. After leading generations in this area for many years, they ranked second in multi-generational homes purchased, at 15%. Younger Boomers had the second highest median household income of all generations at $102,300 and purchased the third most expensive homes at an average of $251,100. On average, this generation purchased 1,900 square foot homes.
Pro tip: Younger Boomers are most likely to use online video sites in their home search at 49%
Older Boomers: Forever Homes
Older Boomers made up 14% of home buyers. More than any other group, Older Boomers cited retirement as a top purchasing reason. They were also the largest purchasers of new homes at 19%, for various reasons, including:
- The ability to choose and customize design features (36%)
- To avoid renovations or problems with plumbing or electricity (27%)
- For the amenities of new home construction communities (25%)
Homes purchased were on average 30 miles away from their previous residence and cost $250,000. Heating and cooling costs were just as important as the cost of windows, doors, and siding, each at 32%.
Pro tip: Eighty-one percent of buyers in this group prefer to be called personally.
The Silent Generation: Steadily Downsizing
The Silent Generation is the group most likely to downsize with their new home purchase, purchasing the second smallest homes of all generational groups. They were also most likely to purchase a home in senior-related housing at 29%, higher than any other generation. Like other generations, they prefer a detached single-family home, but at a median price of $243,000. When choosing a neighborhood they considered proximity to family, friends and relatives, shopping, and health facilities more than any other group. They make up the smallest group of home buyers at just 7%.
Pro Tip: The Silent Generation is 76% more likely to recommend their agent to others. Tip the scales in your favor with reviews and recommendations.
Similarities Across Generations
While real estate decisions can vary depending on age, there are several similarities across each generation:
- All generations of buyers continue to rely on real estate professionals to help them buy and sell their home – great news for you!
- Across all generations, finding the right property was the most difficult step in the home buying process.
- The majority of buyers from all generations used the internet in their home search (What do they find when they search for an agent? Make sure your digital presence is up to snuff!)
- Overall, buyers of all generations were very satisfied with their home buying process.
Check out the infographic below for more generational insights
About the Generational Trends Report
Since 2013, the National Association of REALTORS® has used data from their annual Profile of Home Buyers and Sellers to develop the Home Buyers and Sellers Generational Trends Report. This report evaluates the generational differences and similarities of home buyers and sellers who purchased or sold a home within a 12 month period. Data for the 2019 report was collected between July 2017 and June 2018 and grouped surveyed generations as:
Gen Z (1999 to Present)
Younger Gen Y / Millennials (1990 – 1998)
Older Gen Y / Millennials (1980 – 1989)
Gen X (1965 – 1979)
Younger Boomers (1955 – 1964)
Older Boomers (1946 – 1954)
The Silent Generation (1925 – 1945)
Thanks to realtor.com