Although the typical homebuyer is a 40-something from Generation X, millennials have been entering the market in greater numbers. In fact, the up-and-coming millennials comprise the most active generation of buyers for the fifth consecutive year
Boomers, Gen X, and Gen Y
Generation Y, also called millennials, were born roughly between 1981 and 2000, making them approximately ages 18 to 37. Highly educated, just under half of the cohort has at least a four-year college degree. According to the US Census Bureau, millennials now surpass baby boomers as the largest cohort (83 million versus 75 million). They also comprise the largest segment of the home-buying market. They outnumber Generation X members, roughly 50 million strong, born between 1964 and 1980.
Which generation is buying homes?
The National Association of REALTORS® (NAR) reports that millennials comprised 34 percent of homebuyers for 2017 and 36 percent for 2018. Of those, 65 percent classify as first-time buyers with a median buyer age of 31 years. However, NAR figures show Gen X members, in their peak earning years, still make up 26 percent of buyers. Baby boomers – separated into younger and older boomers – comprise 18 percent and 14 percent of the buying market, respectively. Of the selling market, NAR shows Generation X holds the largest share, at 26 percent.
What type of homes are they buying?
Eighty-five percent of buyers purchased existing homes, and 15 percent purchased new construction, the NAR reports. Eleven percent of those purchasing new construction were millennial buyers. Overwhelmingly, most buyers opt for single-family detached homes (83 percent). While Gen X buyers purchase slightly more square footage, boomers and millennials select homes between 1,800 square feet and 1,870 square feet with three bedrooms and two bathrooms.
How much are the homes they’re buying?
The NAR Home Buyer and Seller Generational Trends Report for 2018 state the median home price for 2018 at $235,000. Generation X buyers purchased the highest-priced homes, with a median of $266,400. Generation Y purchased those termed “more affordable,” at a median price of $220,000. This number rose from 2017’s median affordable home price of $205,000. Millennials tend, more than other cohorts, to purchase over asking price.
How long do they stay in their homes?
Each generation expresses different expectations on how long they’ll remain in their current homes. Millennials anticipate staying for about 10 years; boomers look to remain for 20 years. The median amount of time most expect to stay in their homes is 15 years.
What challenges do millennials have?
According to NAR reports, 46 percent of millennials said they had student loan debt, with a median amount of $25,000. Further, the report said 23 percent of millennials mentioned saving for a down payment was the most difficult aspect of home buying because of the weight of student loans. For the 98 percent who pursue traditional financing, this can make qualifying for a loan difficult.