Once again — for the third year in a row — millennials comprised the largest number of recent homebuyers. Here’s the approximate breakdown of respondents (due to rounding, numbers add up to more than 100 percent):
- Millennials: 35 percent
- Generation X: 26 percent
- Baby boomers: 31 percent
- Silent generation: 9 percent
Millennials moving home to the suburbs
Younger buyers seem to be shifting from seeking homes in urban city centers to the more sedate suburbs. The share of millennials buying in an urban area decreased to 17 percent from 21 percent in the 2015 NAR survey. Also, fewer millennials purchased multifamily homes than last year (10 percent instead of 15 percent).
“Overall, the majority of buyers in all generations continue to purchase a single-family home in a suburban area, and the younger the buyer, the older the home they purchased,” reported NAR in a press release.
“The median age of a millennial homebuyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family,” said Lawrence Yun, NAR’s chief economist, in a statement. “Even if an urban setting is where they’d like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out.
“Furthermore, limited inventory in millennials’ price range, minimal entry-level condo construction and affordability pressures make buying in the city extremely difficult for most young households,” he said.
Other millennial trends
Millennials were certainly making compromises in the homebuying process, according to Jessica Lautz, NAR’s managing director of surveys. These compromises tended to be on the size of house, or the house itself not being perfect. Millennials were also more likely to buy foreclosures than other buyers, she said.
Millennials were willing to see a “diamond in the rough,” fix it up themselves and customize it for their own needs, said Lautz.
“Other notables are that millennials, more than any others, think that buying a home is a good financial investment,” she added.
Rising rents were a major contributing factor for millennials who made the step to buy. While they still had student debt — 44 percent of millennials have student debt of a median size of $25,000 — 23 percent were using a financial gift from a friend or relative to help with a down payment, as well as using their own savings.
This generation was also not thinking of their home purchase as a temporary step.
“Millennials are expecting to live in their homes for 10 years; they are not thinking of it as a starter home. They are thinking of staying settled for a long time,” said Lautz.
One reason for this could be a residual psychological factor left from watching parents go through housing woes in the recession.
Finding a home and using an agent
Consumers are still starting their home searches online, according to NAR — that’s the most common first step for almost every generation, except for buyers between 70 and 90 years old, who contacted a real estate agent as their first step.
Buyers typically looked at 10 homes before finding the one they ended up buying, and most of them were “very satisfied” with their experience — 59 percent, up from 56 percent one year ago.
Most respondents surveyed used a real estate agent to purchase their homes — including 89 percent of millennial buyers and 87 percent of Gen X buyers.
Buyers from all generations said they wanted an agent’s help to find the right home to purchase first and foremost — secondary considerations included terms of sale and help with negotiating price. Millennial buyers most prized help understanding the purchase process (71 percent of them said this was a reason they wanted to hire an agent).
And millennials wanted slightly different qualities in their agents. Boomers and the silent generation said that the agent’s reputation was paramount when choosing an agent; millennial buyers prioritized an agent’s trustworthiness and honesty.
“Among the biggest factors influencing neighborhood choice, millennials were most influenced by the quality of the neighborhood (63 percent) and convenience to jobs (60 percent); convenience to schools was most desired by Gen X buyers, and proximity to friends and family by the Silent Generation,” reported NAR in its release.
How are homes being bought?
In NAR’s statement, Yun also added that the burden of student debt isn’t exclusively limiting millennial purchasers. “Whether it’s from financing their own education or borrowed for their children, it’s somewhat surprising to see a higher median amount of student debt among Gen X ($28,000) and younger boomer buyers ($29,100) compared to millennials ($25,000),” he said.
“One of the many reasons housing supply has been subdued in recent years may be because a segment of homeowners have decided to delay trading up or moving down in order to pay down their debt, including from student loans.”
NAR 2016 Generational Trends: General buyer characteristics
- First-time buyers made up 32 percent of all homebuyers
- The typical buyer was 44 years old with a median household income of $86,100.
- 67 percent of recent buyers were married couples, 15 percent single females, 9 percent single males and 7 percent unmarried couples
- Median income: $77,400
- Bought 1,720-square-foot home
- Homes cost $187,400
- Median income: $104,700
- Bought 2,200-square-foot home
- Homes cost $263,200
- Median income: $100,200
- Bought 1,960-square-foot home
- Homes cost $239,000
- Median income: $81,600
- Bought 1,950-square-foot home
- Homes cost $220,000
- Median income: $67,100
- Bought 1,800-square-foot home
- Homes cost $209,100
NAR 2016 Generational Trends: General seller characteristics
- The typical seller was 54 years old with a median household income of $104,100.
- The median price of a home sold was $240,000, and sellers typically traded down to a home costing a median of $220,000.
- Sellers cited that they sold their homes for a median of $40,000 more than they paid.
- Median income: $102,200
- Sold 1,600-square-foot home
- Homes sold for $192,400
- Median income: $121,300
- Sold 2,000-square-foot home
- Homes sold for $243,300
- Median income: $114,100
- Sold 2,200-square-foot home
- Homes sold for $265,900
- Median income: $85,000
- Sold 2,100-square-foot home
- Homes sold for $259,900
- Median income: $69,500
- Sold 2,100-square-foot home
- Homes sold for $255,000
How the survey is conducted
NAR mailed a 128-question survey to 94,971 people who had purchased a primary residence between July 2014 and June 2015. It received a total of 6,406 responses (a 6.7 percent response rate).