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Home Buyer and Seller Generational Trends

Shelia Fisher - Wednesday, March 11, 2015

Millennials Lead All Buyers, Most Likely to Use Real Estate Agent


Despite the economic and financial challenges young adults have braved since the recession, the millennial generation represented the largest share of recent buyers, according to the 2015 National Association of Realtors® Home Buyer and Seller Generational Trends study, which evaluates the generational differences of recent home buyers and sellers.


The survey additionally found that an overwhelming majority of buyers search for homes online and then purchase their home through a real estate agent, with millennials using agents the most.


For the second consecutive year, NAR’s study found that the largest group of recent buyers was the millennial generation, those 34 and younger, who composed 32 percent of all buyers (31 percent in 2013). Generation X, ages 35-49, was closely behind with a 27 percent share. Millennial buyers represented more than double the amount of younger boomer (ages 50-59) and older boomer (60-68) buyers (at 31 percent). The Silent Generation (ages 69-89) made up 10 percent of buyers in the past year.


Lawrence Yun, NAR chief economist, says the survey highlights the untapped demand for homeownership that exists among young adults. “Over 80 percent of millennial and Gen X buyers consider their home purchase a good financial investment, and the desire to own a home of their own was the top reason given by millennials for their purchase,” he said. “Fixed monthly payments and the long-term financial stability homeownership can provide are attractive to young adults despite them witnessing the housing downturn and subsequent slow recovery in the early years of their adulthood.”


With millennials entering the peak buying period and expected to soon surpass boomers in total population, Yun believes the share of millennial purchases would be higher if not for the numerous obstacles that have slowed their journey to homeownership. “Many millennials have endured underemployment and subpar wage growth, and rising rents and repaying student debt have made it very difficult to save for a downpayment. For some, even forming households of their own has been a challenge.”

According to the survey, 13 percent of all home purchases were by a multi-generational household, consisting of adult siblings, adult children, parents and/or grandparents.


The biggest reasons for a multi-generational purchase were cost savings (24 percent) and adult children moving back into the house (23 percent). Younger boomers represented the largest share of multi-generational buyers at 21 percent, with 37 percent of those saying the primary reason for their purchase was due to adult children moving back into their house.


“Even though the share of first-time buyers has fallen to its lowest level since 19871, young adults in general are more mobile than older households,” adds Yun. “The return of first-time buyers to normal levels will eventually take place in upcoming years as those living with their parents are likely to form households of their own first as renters and then eventually as homeowners.”

Characteristics of Buyers


The median age of millennial homebuyers was 29, their median income was $76,900 ($73,600 in 2013) and they typically bought a 1,720-square foot home costing $189,900 ($180,000 a year ago). The typical Gen X buyer was 41 years old, had a median income of $104,600 ($98,200 a year ago) and purchased a 1,890-square foot home costing $250,000 (same as last year).


Seventy-nine percent of all buyers considered their home purchase a good financial investment, with millennials (84 percent) and Gen X (82 percent) having the highest share, followed by younger and older boomers (both 77 percent), and the Silent Generation (72 percent).


Generation X buyers (68 percent) were the most likely to be married, younger boomers had the highest share of single female buyers (23 percent), and millennial buyers were more likely (compared to other generations) to be an unmarried couple (14 percent).


When asked about the primary reason for purchasing a home, a desire to own a home of their own was highest among millennials at 39 percent. Younger boomers were the most likely to buy because of a job-related relocation or move, and a change in a family situation – likely the birth of a child – was the highest (13 percent) among Gen X buyers. Older boomers (at 15 percent) were the most likely to buy because of retirement.


Searching for and Buying a Home


Regardless of their age, buyers used a wide variety of resources in searching for a home, with the Internet (88 percent) and real estate agents (87 percent) leading the way. Millennials were the most likely to use a real estate agent, mobile or tablet applications, and mobile or tablet search engines during their search; Gen X buyers were the most likely to use an open house.


Although the Internet was the top source of where millennials found the home they purchased (51 percent), they also used an agent to purchase their home at a higher share (90 percent) than all other generations.


NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., says the survey results highlight the fact that while the Internet is widely used during the home search process, the local market knowledge and expertise a Realtor® provides is both valued and highly sought by buyers of all ages.


“Nothing can replace the real insights and guidance Realtors® deliver to help consumers navigate the complex buying and selling process,” adds Polychron.


Although most purchases by all generations were in a suburban area, the share of millennials buying in an urban or central city area increased to 21 percent in the past year (19 percent a year ago), compared with only 12 percent of older boomers (unchanged from a year ago). Older boomers and the Silent Generation were more likely to buy in a rural area (18 percent each). Buyers’ median distance from their previous residence was 12 miles, with older boomers moving the furthest at a median distance of 30 miles.


The majority of all buyers (79 percent) purchased a detached single-family home. Gen X buyers represented the largest share of single-family homebuyers (85 percent), and the Silent Generation was the most likely to purchase a townhouse or row house (10 percent). A combined 7 percent of millennial buyers bought an apartment, condo or duplex in a building with two or more units.


Among the biggest factors influencing neighborhood choice, millennials were most influenced by the quality of the neighborhood (75 percent) and convenience to jobs (74 percent). Convenience to schools was most desired by Gen X buyers and proximity to health facilities by the Silent Generation.


Millennials plan to stay in their home for 10 years, while the baby boom generation as a whole plans to stay for a median of 18 years.


Financing the Purchase


NAR’s study found that 88 percent of all buyers in the past year financed their purchase. Millennials (97 percent) and Gen X (96 percent) were more likely to finance than older boomers (72 percent) and the Silent Generation (61 percent). The median downpayment ranged from 7 percent for millennial buyers to 20 percent for older boomers.


Younger buyers who financed their home purchase most often relied on savings for their downpayment, whereas older buyers were more likely to use proceeds from the sale of a primary residence. Younger buyers also were more likely to receive a gift from a relative or friend, typically their parents, cited by 25 percent of millennials and 15 percent of Gen X.


Twelve percent of all recent buyers had delayed their home purchase due to outstanding debt. Among the 22 percent of millennials who took longer to save for a downpayment, 54 percent cited student loan debt as the biggest obstacle – down slightly from 56 percent a year ago.


Younger buyers were more likely to finance their purchase with a low downpayment Federal Housing Administration-backed mortgage, whereas older buyers were more likely to obtain a mortgage through the Veterans Affairs loan program.


Characteristics of Sellers


Gen X homeowners represented the largest share of sellers in the past year (27 percent), followed by older boomers (23 percent) and younger boomers (20 percent). The older the seller, the longer he or she was in the home. Millennials had been in their previous home for a median of five years, while older boomers and the Silent Generation stayed for 13 years.


Younger sellers were more likely to need a larger home or move for job relocation. In comparison, older buyers wanted to be closer to family or friends, said their home was too large, or were moving due to retirement.


The survey additionally found that Gen X sellers were the most likely to have wanted to sell earlier but were stalled because their home had been worth less than their mortgage (23 percent compared to 16 percent for all sellers).


Sellers moved a median distance of 20 miles, with boomers and the Silent Generation moving further distances and downsizing to a smaller-sized home. A combined 60 percent of responding sellers found a real estate agent through a referral by a friend, relative or neighbor, or used their agent from a previous transaction. Eighty-three percent are likely to use the agent again or recommend to others.


While all sellers wanted help in marketing their home to potential buyers, younger sellers were more likely to want their agent to help with pricing the home competitively or selling within a specific timeframe.


NAR mailed a 127-question survey in July 2014 using a random sample weighted to be representative of sales on a geographic basis. A total of 6,572 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 9.4 percent. The recent homebuyers had to have purchased a home between July of 2013 and June of 2014. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.


All information is characteristic of the 12-month period ending in June 2014 with the exception of income data, which are for 2013.


The 2015 NAR Home Buyer and Seller Generational Trends study is posted at: http://www.realtor.org/reports/home-buyer-and-seller-generational-trends.


The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.


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Home Buyer and Seller Generational Trends

Web Admin - Wednesday, July 10, 2013

According to a new study released today, Millennials are more confident than any other age group that their recent home purchase was a good financial investment. The inaugural 2013 National Association of Realtors® Home Buyer and Seller Generational Trends evaluated the generational differences of recent home buyers and sellers and found that while eight out of 10 recent buyers considered their home purchase a good financial investment, the number was even higher, 85 percent, for younger buyers under the age of 32.


A Century 21 Fisher & Associates newsletter provides the highlights of this new study.


For additional NAR commentary on the home buying habits of Millennials, watch this video:



“Homeownership is an investment in your future, and is how many younger American families begin to accumulate wealth,” said Paul Bishop, NAR vice president of research. “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 baby boomers, is expected to give a powerful boost to long-run housing demand, though in the short-term mortgage accessibility and student debt repayment remain challenges.”


The study found that the largest group of recent buyers was Generation X Americans, those born between 1965 and 1979, who comprised 31 percent of recent purchases, followed closely by Millennials, sometimes called Generation Y, those born between 1980 and 2000, at 28 percent. Percentages of recent home purchases among prior generations was significantly lower, 18 percent were Younger Boomers, those born between 1955 and 1964; 14 percent were Older Boomers, Americans born between 1946 and 1954; and 10 percent were from the Silent Generation, those born between 1925 and 1945.


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 previous living arrangement of recent buyers varied greatly across the generations; among Millennials, 65 percent rented an apartment or house and 22 percent lived with their parents, relatives or friends; more than half of all Baby Boomer and Silent Generation buyers owned their previous residence.


The study found that older generations of home buyers prefer more recently built homes. Millennials typically bought homes built around 1986, nearly a decade older than the homes typically bought by the Silent Generation.


Younger buyers had a tendency to stay closer to their previous residence, often staying within 10 miles, whereas older buyers moved longer distances, typically more than 20 miles from their previous home.

Younger buyers were more likely to buy in an urban or central city area than older buyers; 21 percent of Millennials bought a home in an urban location compared to only 13 percent of Older Boomer and Silent Generation buyers.


The reason for buying a home also varies across the generations; younger buyers most often cited the desire to own a home of their own whereas older buyers wanted to be closer to family and friends. When it comes to factors influencing neighborhood choice, younger generations cited convenience to jobs, affordability of homes, and quality of the school district. Older generations placed higher importance on convenience to family and friends and healthcare facilities.


When it comes to a home’s green features, younger buyers placed higher importance on commuting costs than older generations who placed higher importance on a home’s energy efficient features and living in an environmentally friendly community.


Millennials tended to make more compromises with their home purchase than any other generation. Millennials most often conceded 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.


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 X-ers, 28 percent of Younger Boomers, and 27 percent of Older Boomers, and 26 percent of the Silent Generation.


Home buyers of all ages often begin the home buying process by looking online for properties for sales; however, the frequency of use of the internet to search for homes decreases as age increases. Ninety percent of Millennials frequently used the internet to search for homes compared to less than half of Silent Generation buyers. Younger generations of buyers were also more likely to find the home they purchased through the internet; older buyers most often learned about the home they purchased from their real estate agent.


Buyers of all ages gain many benefits from working with a real estate professional. Among the age groups, younger buyers are more likely to want an agent’s help understanding the home buying process, presumably because many are buying a home for the first time. Younger buyers were most often referred to their agent by a friend, neighbor or relative whereas older buyers were increasingly likely to work with the same agent they previously used to buy or sell a home.


When it comes to choosing an agent, reputation was important to buyers of all ages; however, younger buyers more often cited an agent’s honesty and trustworthiness as the most important factor compared to older buyers who most often cited the agent’s knowledge of the neighborhood – perhaps because older buyers tend to move further distances and may have less familiarity with area.


The median down payment for Millennials was 5 percent, considerably less than older generations of buyers whose down payment ranged from 8 percent for Gen X buyers to 22 percent for Silent Generation buyers. Younger buyers who financed their home purchase most often relied on savings for their down payment whereas older buyers were more likely use proceeds from the sale of a primary residence.

“An interesting finding is that Older Boomers and Silent Generation buyers found the mortgage application and approval process more difficult than expected compared to younger buyers,” said Bishop. “This underscores the ongoing challenges that many credit worthy home buyers face with today’s tight credit standards.”


The largest group of recent home sellers was from Generation X, comprising 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.


Like buyers, older sellers tend to move greater distances, and are more likely than younger generations to move out of the state or region. While younger buyers 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.


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 X-ers 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.


The reasons for selling a home also varied among the generations. Younger buyers were more likely to move to accommodate job relocation or desired to upgrade to a larger home. In comparison, older buyers were often looking for a smaller home due to retirement and because upkeep was too difficult due to health or financial limitations, or to be closer to family or friends.


When it comes to negotiating, older sellers are often more willing to reduce their home’s asking price but are less likely to offer buyer incentives such as home warranty policies or assistance with closing costs.

Of sellers working with real estate agents, the study found that older generations of buyers are more likely to use full-service brokerages in which agents provide a broad range of services. While more than two-thirds of Millennials used full-service brokerages, they were more likely than other generations to choose limited service, which includes discount brokerage, or minimal service, such as simply listing the home on a multiple listing service, presumably because they have less equity in their home.


Sellers of all ages typically found a real estate agent through a referral or friend; however, younger sellers were more likely to use the same real estate broker or agent for their home purchase, 59 percent of Millennials used the same agent compared to 42 percent of Older Boomer sellers. Younger sellers typically want their selling agents help with selling the home within a specific timeframe and pricing the home competitively, whereas older buyers are looking for their agent’s help with marketing the home and finding a buyer.


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