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Over the last three years, we have seen a major shift in homebuyer demographics. Due to circumstances such as the 2008 market crash, increases in student loans and low starting salaries, Millennials (ages 22-37) were slower to enter the housing market than previous generations. However, in addition to purchasing more homes and becoming more traditional in their buying habits, Millennials now represent the greatest share of buyers at 36 percent.
The 2018 NAR Homebuying and Selling Report showed an increased share of Millennials purchasing detached single-family homes in suburban locations. Sixty-six percent of Millennial buyers are married couples, 48 percent have children under the age of 18 in their home and 15 percent are unmarried couples (the largest share of all generations).
Gen Xers (ages 38-52) represent 26 percent of home buyers in 2018. They are at the height of their earning years and thus their incomes rank the highest of all generations with an average household income of $104,700. Gen Xers are the most likely to be married and to have children under the age of 18 living in the home and their housing preferences are driven by their family-orientated lifestyle. Buyers between the ages of 38 and 52 also favor the largest and highest median priced homes of all other buyer groups. Driving motivation for Gen Xers centers around convenience to work as well as quality and convenience of schools.
Baby Boomers are the most diverse in their demographics and buying behaviors. Younger Baby Boomers (ages 53 to 62) represent 18 percent of recent buyers, have a higher median income than older Baby Boomers and are more likely to have children under the age of 18 living in their home. They are also the most likely to purchase multigenerational homes at 20 percent. The older Baby Boomers (ages 63-71) are generally motivated to buy due to retirement, desire to downsize and desire to live closer to family and friends. They typically make the longest distance moves at a median of 30 miles.
At six percent market share, the Silent Generation (ages 71-92) represent the smallest share of buyers with the lowest median household incomes. Their motives typically involve a desire to be closer to family and friends and the need to downsize. The Silent Generation buyers are also the least likely to purchase a detached single-family home and 28 percent purchased in active adult and retirement communities.
Home financing methods have remained largely consistent with reports from previous years. Eighty-eight percent of buyers finance their homes, a share that decreases as the buyer’s age increases. Student loan debt is reportedly the largest obstacle preventing potential buyers from successfully completing a transaction. Forty-six percent of buyers aged 37 and younger report having student loan debt with a median balance of $25,000. The share of buyers impacted by student loan debt decreases as the age of the buyer increases. Only 26 percent of buyers between the ages of 38 to 52 carry student loan debt, however, they have the highest median loan balance at $28,000. This is a result of personal student loans as well as accumulated debt from their children’s student loans.
Home seller demographics differ significantly from homebuyers. Gen Xers account for the largest generation of sellers at 26 percent. The second largest generation of sellers are the young Baby Boomers, who hold 23 percent of the market share. Consistent with pervious years, sellers younger than 52 tend to trade up to a larger and more expensive home when they buy while sellers between the ages of 53 and 62 remain in similarly priced and sized homes and sellers 63 and older are often downsizing to a lower priced home.
All generations of buyers and sellers continue to consult with real estate agents to help them navigate the home purchase and sale process. Buyers utilize agents to identify homes, negotiate terms of sale and assist with price negotiations. Home sellers work with real estate agents to strategically price their home, market it effectively and sell in an expedited time frame.
If you need assistance with the home purchase or sale process, please contact one of our qualified real estate professionals.