A number of the homebuying characteristics of younger millennials are replicating the buying desires of those in the silent generation.
This is according to the latest study from the National Association of Realtors®, the 2020 Home Buyer and Seller Generational Trends report1, which researched each generation to examine the differences of recent homebuyers and home sellers.
The NAR report found that despite the obvious age gap between millennials and those that make up the silent generation, the two groups are likeminded in terms of buying preferences. Among both age groups, proximity to friends and family is a high priority, with 53% of homebuyers between the ages of 22 to 29 and 74 to 94 listing this as a major factor that would influence their decision in selecting a neighborhood.
“The silent generation – older Americans who are typically grandparents and great-grandparents – for years have prioritized living near family and other loved ones,” said Lawrence Yun, NAR’s chief economist. “But it was surprising to see younger millennials with homebuying preferences and ideals similar to older segments of the population.”
Thirty-three percent of home sellers aged 74 to 94 said the primary reason for selling their previous home was to move closer to friends and family, a deviation from historical trends that pushed home sellers to relocate more so due to reasons such as career changes or retirement. However, now sellers have expressed a strong desire to be near family and friends and in some cases are motived to sell for this reason.
Another similarity between the two groups is seen in those classified as “recent buyers.” Younger millennials and silent generation buyers who purchased a new home, were the most likely to make the purchase due to the amenities a newly constructed home provides. This aligns with norms of older generations but represents a new trend for younger homebuyers.
NAR found those in each generational group began their home search by viewing properties online, although buyers 74 and older contacted a real estate agent or broker nearly as often as they looked online. This group, along with the youngest buyers, were more likely than others to confer with a friend or relative regarding their homebuying process, indicating that despite the resources made readily available by the internet, both younger and older buyers call on the advice of a trusted friend or relative.
All generations of buyers found the services of a Realtor® or agent were needed as the primary resource to help them buy and sell their home.
“As technological advances are made, more potential buyers will want to consider the latest homebuying apps,” said Yun. “However, we see buyers of all ages prefer an experienced Realtor® or broker to assist with this major, complex transaction.”
Moreover, half of all homebuyers between the ages of 22 to 39 found a real estate agent through a referral provided by a friend or family member.
Although younger homebuyers closely mirror older buyers, the two groups are not totally in sync. Younger millennials have the highest share of unmarried couples buying homes at 21%, whereas only 3% of homebuyers in the silent generation and 3% of older boomers were unmarried at the time of purchase. Older millennials have the highest share of married couples, 67%.
For context, 61% of all recent buyers were married couples, 17% were single women, 9% were single men and another 9% were unmarried couples.
Twenty-two percent of homebuyers between the ages of 65 to 73, older baby boomers, are single women. A number of factors go into this share, including single divorcees entering the market, widows and unmarried women.
Another area where younger homebuyers stood apart from other buyers was in their living arrangements. Thirty-three percent of homebuyers aged 22 to 29 reported living with parents, relatives or friends prior to buying a home. Of this 33%, 13% paid rent and 20% paid no rent. The next highest share was homebuyers aged 30 to 39, where 13% lived with parents, relatives or friends. This same living situation was found in only 5% of buyers aged 65 to 73, and in 6% of buyers ages 74 to 94.
Other notable findings
Twenty-five percent of the homes purchased by those aged 22 to 29 were located in a small town. This speaks to affordability conditions, essential among younger buyers who traditionally are not in a position to afford high-cost housing. As affordability wanes, as outlined in a recent NAR report, 64% of homebuyers aged 22 to 29 said the overall affordability of a home influenced their decision to purchase.
Forty-six percent of homebuyers aged 30 to 39 said school district quality influenced their decision making, while 36% of buyers from the same age group cited proximity to schools as an influential factor.
“The importance of being near schools and assessing the quality of a given school district is prevalent among older millennials,” said Yun. “Also, proximity to healthcare facilities is important for older boomers.”
The NAR report found that homebuyers aged 40 to 54, Generation Xers, had the highest household incomes of any age group at $110,900. Still, Gen Xers overall are facing some challenges, as 11% of Gen X home sellers stated a desire to sell earlier but were delayed because their home was worth less than the mortgage.
Furthermore, home purchases were delayed a median of five years for Gen X buyers, which Yun says is in part due to student loan debt and lingering impacts of the Great Recession.
This age group also comprised the most racially and ethnically diverse population of homebuyers, with 24% identifying they were a race other than White/Caucasian. This finding comes as a recent NAR report examined the change in the homeownership rate among minorities.
One in six younger boomers and Gen Xers are buying multi-generational homes. In many cases, the intent is to care for aging parents or to accommodate children over the age of 18.
Millennials as a whole made up the largest share of homebuyers over the past year (38%), marking the seventh consecutive year the group represented the most active generation of buyers. Millennials were also most likely to purchase a previously-owned home or townhouse, and were those most likely to find their home online and to use the internet during their home search. Convenience to workplaces and commuting expenses were some of the most important factors to the millennial age group.
“For several years now, millennials have shown that homeownership is important to them,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “Their reasons vary: some are starting families, others are caring for aging parents, while others found that buying a home was decidedly cheaper than renting.”
Additionally, millennials had a dominating presence in several other homebuying categories, including in regard to first-time buyer totals. Eighty-eight percent of younger millennials and 52% of older millennials were first-time home buyers, more than every other age group. The older millennials were also the most educated age group, as 79% hold at least a bachelor’s degree.
NAR mailed a 125-question survey in July 2019 using a random sample weighted to be representative of sales on a geographic basis to 159,750 recent homebuyers. Respondents had the option to complete the survey via hard copy or online; the online survey was available in English and Spanish. A total of 5,870 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 3.7%. The sample at the 95% confidence level has a confidence interval of plus-or-minus 1.28%.
The recent homebuyers had to have purchased a primary residence home between July 2018 and June 2019. All information is characteristic of the 12-month period ending July 2019 with the exception of income data, which are for 2018.
The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.
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1 Survey generational breakdowns: younger millennials (ages 22-29); older millennials (ages 30-39); Gen Xers (ages 40-54); younger boomers (ages 55-64); older boomers (ages 65-73); and the silent generation (ages 74-94).