Survey finds serious generational differences
In studying generational differences of recent home buyers and sellers, the National Association of Realtors (NAR) found that millennials are moving to the suburbs, younger generations are more likely to use a real estate agent, a growing number of millennials and younger boomer buyers have kids living at home, and student debt is common in Gen X and boomer households. Whew, that’s a mouthful.
NAR points out that while much focus has centered around millennials’ homeownership challenges, Gen X is often lost in the discussion, a generation that fueled the greatest share of purchases in the past year.
Gen X has the most student loan debt
NAR Chief Economist, Dr. Lawrence Yun notes that this generation started families, entered the middle part of their careers, and bought homes, only to be rattled by job losses, slipping home values, and overall economic uncertainty during and after the Great Recession.
In the past year, Gen X households experienced equity challenges, and were the most likely generation to have previously sold a distressed property and the most likely to want to sell earlier but were underwater and couldn’t.
The survey found that Gen X had the most student loan debt this year ($30,000) and delayed buying a home longer than millennials because of equity and debt challenges.
“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” said Dr. Yun. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year and are definitely needed to ease the inventory shortages in much of the country.”
An uptick in purchases from Gen X
Despite the equity and student loan debt challenges, the uptick in purchases from Gen X buyers (28 percent) was the highest level in three years.
Millennials were the largest group of recent home buyers (34 percent) followed closely by boomers (30 percent) and the silent generation accounted for 8.0 percent of home purchases.
Younger boomers focused on adult children
This year, NAR points out a rising trend – younger boomers increasingly considering their adult children as they buy. Because rents are soaring nationally, younger boomers were the most likely to purchase a multi-generational home (20 percent, up from 16 percent in 2016), citing adult children moving back in or never having left as the top reason.
Meanwhile, household formation rates remain delayed, dragging down homeownership rates and shifting how older generations buy homes in preparation.
“The job market is very healthy for young adults with a college education, but repaying student debt and dealing with ever-increasing rents on an entry-level salary are forcing many to either shack-up with several roommates or move back home,” said Dr. Yun.
Moving on to millennials
The NAR survey indicates that millennials have more kids in tow (49 percent have at least one child, up from 43 percent just two years ago), demanding more space at an affordable price, pushing them to the suburbs. Only 15 percent of millennial buyers bought in an urban area, down from 21 percent two short years ago.
“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” added Yun. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families. A significant boost in new and existing inventory will go a long way to ensuring the opportunity is there for more of them to reach the market.”
Demand for real estate professionals
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In this year’s survey, nearly 90 percent of respondents said they worked with a real estate agent to buy or sell a home. This kept for-sale-by-owner transactions down at their lowest share ever (8 percent).