Millennials are once again driving the home purchase market: NAR

Millennials replaced baby boomers as the largest group of homebuyers in 2023.

The combined share of millennials, both younger (ages 25 to 33) and older (ages 34 to 43), made up a combined 38% of the home purchase market last year, up from 28% in 2022, according to the 2024 Home Buyers and Sellers Generational Trends report from the National Association of Realtors (NAR).

Meanwhile, baby boomers — comprising both younger boomers (ages 59 to 68) and older boomers (ages 69 to 77) — saw their share decrease from 39% to 31% during the same period.

“The generational tug-of-war between millennials and baby boomers continued this year, with millennials rebounding to capture the largest share of home buyers,” Jessica Lautz, NAR deputy chief economist and vice president of research, said in a statement. “This notable rise is attributed to both younger millennials stepping into homeownership for the first time and older millennials transitioning to larger homes that suit their evolving needs.”

The report highlights a surge in first-time buyers across all age groups, with millennials leading the charge. Notably, 32% of all buyers in 2023 were first-timers (up from 26% in the prior year), with millennials comprising 75% of this demographic. Additionally, older millennials and Generation X (ages 44 to 58) also saw significant representation among first-time buyers, respectively accounting for 44% and 24% of this group. 

Generation Z, which comprises individuals between ages 18 and 24, only accounted for 3% of all buyers. But among this age group, 31% were single women,  a significantly higher proportion than in any other age group.

“Gen Z buyers are entering the housing market, and their demographics are emerging distinctly from other age groups,” Lautz said. “More than half are single buyers, outpacing all age groups of single men and single women, and they are also most likely to identify as LGBTQ+.”

Baby boomers remained the largest generation of home sellers, accounting for 45% of all sellers in 2023, down from 52% in 2022. 

The tenure of homeownership varies by generation. The median amount of time spent in a home among all buyers was a 10-year stay before selling, but older millennials sold their homes after a median stay of just six years. Meanwhile, Gen X, baby boomers and the Silent Generation (ages 78 to 98) typically stayed in their homes for 15 years.

“Baby boomers continue to dominate the home-selling market as they make pivotal decisions regarding their retirement living situations, whether it’s right-sizing or moving closer to loved ones,” Lautz said. “Benefiting from longer periods of homeownership compared to other generations, boomers approach these transactions with substantial equity, enabling strategic housing trades.”

A recent survey conducted by Redfin found that over three-quarters (78%) of older American homeowners (ages 60 and up) are planning to stay in their current home as they age. Meanwhile, about one in five baby boomers (19%) are considering moving into a community with older people or have already done so. Smaller shares of baby boomers are considering moving in with an adult child, moving to an assisted-living facility or moving in with friends.

The inertia of baby boomers is making it harder for younger Americans to find a family home, according to a Redfin analysis. In fact, empty-nest baby boomers own 28% of three-bedroom homes in the U.S., while millennials with kids own just 14%. Furthermore, nearly 80% of boomers own the home they live in, compared to 55% of millennials. 

Homeownership continues to be perceived as a sound financial investment by 82% of all buyers surveyed by NAR — especially younger millennials. Across all generations, the role of real estate agents also remains pivotal. Nine in 10 buyers expressed willingness to enlist their agent’s services again or recommend them to others. Similarly, sellers showed a high likelihood of reusing or referring their agents.

“The universal value of owning a home transcends every generation, serving as a cornerstone for both personal prosperity and community development,” NAR President Kevin Sears said in a statement. “In navigating the complexities of the market, buyers and sellers continue to rely on agents who are Realtors for their expertise and guidance, underscoring the invaluable service they provide in bringing dreams of homeownership to life.”

To conduct this study, NAR sent a 129-question survey in July 2023 to 189,750 recent home buyers and received 6,817 responses from primary residence buyers. Buyers had to have purchased a primary residence between July 2022 and June 2023.

Read more at HousingWire.com

Related Links

• Single Women Are Embracing Homeownership

• Exploring Opportunities: How to Get Started in the Real Estate Market

• Home price growth is back at pre-pandemic levels. Here’s what that means for buyers and sellers

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The most popular home features per State: What are homebuyers searching for?

What features are home buyers searching for?

Here’s the most popular home feature per state according to Realtor.com

What is the most popular home feature among home buyers? Across the U.S., people swoon over fabulous pools, stunning water views and storage space. Here we looked at keyword home search data in each U.S. state to determine regional must-have features when searching for a home. 

According to the data, Mainers want to go “upta camp,” a local term used for a cabin or cottage. Oklahomans are looking for storm shelters and California loves solar power. In Hawaii, where real estate prices are sky-high and leaseholds are part of the for-sale market, home shoppers are searching for “fee simple” homes, to ensure they own the land and the building in their little piece of paradise. Additionally, D.C. residents want to be near the Metro (its local public transportation system), Pennsylvanians want parking and in New York, where outdoor space can be hard to come by, residents would love to have a balcony.

Expanded Space and Inter-generational Living

Topping the list of most popular home features are the makings for man-caves, she-sheds, workshops and granny pods. Popular search terms in this category include in-law apartment, barn, ADU (accessory dwelling unit), and casita. Residents in 13 states including Arizona, Idaho, Louisiana, Massachusetts, Mississippi, Montana, New Jersey, New Mexico, Nevada, Oregon, Texas, Utah and Washington all want alternative living spaces. Whether buyers are pursuing some extra rental income, or are looking for a work space, or prefer being in close proximity to their relatives, separate spaces are a top must-have item. 

Valuing the Privacy of a Country Life

Unsurprisingly, people in many states love their privacy — acreage, fenced yard, room for horses and a country setting all make the top searched feature list. Home shoppers in six states — Alaska, Iowa, Illinois, Vermont, Wisconsin, and Wyoming — all want room to roam and some real separation from the neighbors. 

Avoiding the Stairs

With a large number of baby boomers reaching retirement age, America has fallen out of love with having to climb stairs. Residents in nine states — Colorado, Delaware, Georgia, Kentucky, Maryland, North Dakota, Ohio, Rhode Island and Virginia — don’t want anything to do with multi-level homes. Top searches in these states include first-floor master, ranch, rambler and single level.

The Great Outdoors and Local Getaways

For some, the old adage rings true that real estate is all about location, location, location. In Arkansas, Florida, Minnesota, Missouri, Tennessee and West Virginia having local getaways with beautiful views topped the must-have list. Home buyers in these states are searching for a lake view, canal, dock, lakeshore and river access as their favorite features. For others, it’s all about looks. For example in Connecticut and New Hampshire, states with a lot of older homes, people are looking for contemporary style, South Carolinians love traditional brick facades and Texans prefer a modern aesthetic. 

Visit Realtor.com to see the most popular feature in every state.

Methodology

The top features were derived from realtor.com® home keyword search data between April 2019 and December 2019, generating a list of twenty features per state. The most searched for term from each state was selected, omitting the responses that appeared consistently across states.

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Millennials are looking forward to buying a home, but feel overwhelmed by the process

First-timers admit they seek help from mom and dad

Millennials are buying homes. This much is known. But, despite the much-discussed generation making their entrance into the housing market, many still are still very uneasy about the process.

To try to get into the minds of millennials, TD Bank surveyed more than 850 millennials (which it categorizes as age 23-38) who are planning to buy their first home in 2020.

According to TD Bank’s First-Time Homebuyer Pulse, 68% said they think now is the right time to buy a home and 52% are actively searching home listings online.

But, 75% of first-time Millennial homebuyers admit they’re overwhelmed by the process of buying a home.

As for what’s weighing on millennials’ minds, the answers vary.

Image courtesy of TD Bank. Click to enlarge.

Just over half of those surveyed said they are worried about their job stability when it comes to looking for somewhere to live.

Meanwhile, 35% said they are thinking about their relationship with their significant other, 57% said they are worried about the state of the economy, and 47% said they are keeping in mind potential policy changes in the 2020 election – all of which play a role in their homebuying anxiety.

Unsurprisingly, student loan debt is playing a role too. Just over 40% of Americans who graduated in the last 20 years said they have delayed purchasing a home because of their student loan debt, the report said.

Even though a big chunk of Millennials say they are planning to purchase a home in the next 12 months, only 52% said they have started saving for a down payment, and 53% have reviewed their credit reports.

Meanwhile, only 42% said they have established a budget for their home purchase and only 30% have spoken with a mortgage lender.

“It continues to amaze me how many buyers begin their home search without first speaking with a mortgage lender,” said Rick Bechtel, head of U.S. residential lending at TD Bank. “A knowledgeable loan officer will work hand-in-hand with a buyer to help them understand mortgage and homeownership costs and establish a realistic budget. To put the cart before the horse is to pursue a significant life decision with possibly incomplete or inaccurate information.”

A decent amount said they feel prepared to buy, but it’s that same amount that said steep home prices are keeping them from purchasing a home in the neighborhood they desire, 22% both cases.

Of those respondents, 36% said they thought homes were overpriced. On the other end, 17% of buyers said they have yet to buy a home because they enjoy renting in their current neighborhood, but can’t afford to buy there.

“The millennial cohort of homebuyers is unlike any other in history,” said Bechtel. “They grew up during the explosion of personal technology, the fall of the housing market and the renaissance of the rental market. And as our survey found, their expectations of homeownership are shaped by all of it.”

Although Millennials were considerably young during the housing crisis in 2008, 67% said they are familiar with the housing crisis, while 55% said their family or a family they knew lost their home.

Those who were influenced by the housing crisis said it made them nervous to buy a home (47%), and a whopping 70% said they view the housing market as fragile.

And in an offshoot of that, 85% of buyers who said their families lost their home during the 2008 housing crisis said they will receive financial help from their parents when they go to buy their first home.

The most common way parents are contributing to the child’s home purchase is in the form of their child’s down payment (33%), followed by closing costs (20%), monthly mortgage payments (17%) or by co-signing the loan (9%).

All in all, mom and dad are still the role models for many of these Millennials. Case in point, 37% say they regularly ask their parents for advice about homebuying.

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Low mortgage rates will boost prices in 2020, according to Fannie Mae

30-year fixed mortgage rate likely will average 3.7%, down from 3.9% in 2019

Fannie Mae raised its forecast for 2020 home-price gains, saying low mortgage rates and a strong labor market will pump up demand for properties.

Single-family home prices probably will increase at a 4.6% pace this year, Fannie Mae said in a forecast on Tuesday. That compares with the 4.1% advance for 2020 the mortgage giant predicted a month ago.

The forecast is based on the Federal Housing Finance Agency‘s home-price index that measures single-family homes purchased using conventional mortgages.

“Think about someone focused on the size of payment they can afford,” Doug Duncan, Fannie Mae’s chief economist, said in an interview. “If you hold the size of the payment constant and interest rate component shrinks, that give you some latitude to bid up prices. That’s what’s happening.”

Price gains will push the volume of mortgage originations used for home purchases to a record $1.37 trillion, Fannie Mae said.

The average U.S. rate for a 30-year fixed mortgage probably will be 3.7% in 2020 and 2021, according to the forecast. That compares with 3.9% in 2019 and 4.5% in 2018, Fannie Mae said.

The labor market will continue to be robust, the forecast said. The U.S. unemployment rate probably will average 3.8% in 2020, compared with a 50-year low of 3.7% in 2019, the mortgage financier said.

However, the market continues to grapple with a supply shortage.

The number of single-family homes for sale dropped to 1.45 million in November, the lowest level for that month in a data series that goes back to 1982, according to the National Association of Realtors. The U.S. has added 96.5 million people in the intervening years.

Help is one the way, though. December’s housing starts spiked to a 13-year high, according to government data. For all of 2020, builders are expected to break ground on 975,000 single-family homes, according to Fannie Mae’s forecast. That would be the highest since 2007.

“Builders are accelerating their production, but there’s a lot of pent-up demand from household formation,” Duncan said. “They’re not going to be able to make it up in the short run.”

If you are searching for a home, it’s important to stay in close contact with both your Realtor and your Lender to make sure that you are balancing the difference between rising home prices and decreasing interest rates - each of these can make a huge difference on your monthly payment and overall mortgage debt situation!

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The Best Times to Buy and/or Sell Real Estate in Colorado in 2020

2020 Projections for the Greater Denver Area’s Housing Market

Last week, we published the year-end Market Report Wrap-up, and 2019 is likely to be the year we define as showing signs of an official “Tipping Point in Affordability.”

In 2019 for Attached and Detached Homes in the 7 County Denver Metro Region:

• 65,245 New listings were presented to market, of which 54,414 homes sold meaning that 83.4% of homes listed resulted in a sale.

• Appreciation slowed from previous years, with an annual average appreciation 3.3% clearly indicating the affordability tipping point is happening.

• Even with slowed appreciation we managed to have our best year in Total Sold Volume reaching just over $26 billion, a 9.3% increase over 2018.

Affordability is sliding down, and we now report that the number of transactions requiring financing is the highest we’ve seen in the last 10 years. 86.3% of homes closing in 2019 required some sort of loan to secure the property.

Looking into 2020, the next shift in the affordability tipping point likely surface when interest rates begin to rise. Rising interest rates will have an impact quickly on buyer purchasing power.

Thank you to Megan Aller and First American Title for compiling and providing this information!

If you have questions about this information, or would like to talk about how these projections might impact your home’s value or property search, contact us!

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