Millennials are a driving force in the housing market, whether buying homes themselves or influencing their parents’ decisions, according to an NAR survey.
Millennials are a driving force in the housing market, whether buying homes themselves or influencing their parents’ homebuying decisions, according to a survey from the National Association of Realtors.
NAR’s “2019 Home Buyers and Sellers Generational Trends Report” found that 16 percent of Gen Xers (those born between 1965 and 1979) and 15 percent of younger boomers (those born between 1955 and 1964) bought a multigenerational home between July 2017 and June 2018. Twelve percent of all buyers bought multigenerational homes, which are defined by the U.S. Census Bureau as properties that house more than two generations of adults under one roof or grandparents living with grandchildren under the age of 25.
The top reason listed for buying a multigenerational home by all age groups except those aged 28 and younger was to take care of aging parents. For that younger group, cost savings was the biggest factor. More than half of Gen Xers, 52 percent, and nearly half of younger boomers, 46 percent, said they bought a multigenerational home because they either had children or other relatives over 18 who never left home or who were moving back in.
“The high cost of rent and lack of affordable housing inventory is sending adult children back to their parents’ homes either out of necessity or an attempt to save money,” said NAR Chief Economist Lawrence Yun in a statement.
“While these multi-generational homes may not be what a majority of Americans expect out of homeownership, this method allows younger potential buyers the opportunity to gain their financial footing and transition into homeownership. In fact, younger millennials are the most likely to move directly out of their parents’ homes into homeownership, circumventing renting altogether.”
Millennials made up the largest share of homebuyers of all generations: 37 percent of all buyers. Older millennials (those born between 1980 and 1989) took the lead at 26 percent of buyers while younger millennials (those born between 1990 and 1998) were 11 percent.
The report separated millennials into two groups for the first time this year because younger millennials are now a bigger group among buyers than the Silent Generation (those born between 1925 and 1945) who are now 7 percent of buyers.
That separation allowed a different picture to emerge for younger and older millennials in terms of income and debt. Older millennials’ median household income in 2017 was $101,200 and they purchased homes with a median price of $274,000, similar to Gen Xers and younger boomers. But younger millennials’ median household income was $71,200 and they bought homes at a median $177,000.
Nearly half of younger millennials, 47 percent, reported having student loan debt compared to 42 percent of older millennials, 27 percent of Gen Xers, 10 percent of younger boomers and 4 percent of older boomers. Younger millennials’ student loan debt came in at a median $21,000 compared to a median $30,000 for older millennials and Gen Xers.
While 61 percent of younger millennials reported that student loan debt delayed their home purchase, that delay was only a median of two years, which was the shortest delay among all generations, according to NAR. More than a quarter of all younger millennial buyers (28 percent) bought a home with the help of a gift compared to 12 percent of buyers overall.
“These buyers are the most likely to receive some or all of their down payment as a gift from family or friends, usually their parents,” Yun said. “This could explain why their debt is not holding them back from homeownership as long as other generations, who are less likely to receive down payment assistance.”
Baby boomers as a whole were the second-largest share of homebuyers at 32 percent. They were also by far the largest share of homesellers at 43 percent. While student loan debt held millennials back from buying, for boomers and Gen Xers, credit card debt was more likely to delay their home purchase than any other expense.
Nearly two-thirds of all buyers, 63 percent, were married couples, while 18 percent were single females, 9 percent were single males and 8 percent were unmarried couples. The share of married couples was highest among older millennials at 69 percent and lowest among the youngest buyers at 54 percent.
Among sellers overall, 71 percent were married couples, 17 percent were single females, 6 percent were single males and 4 percent were unmarried couples.
The most racially diverse generation among both buyers and sellers was Gen X with 25 and 26 percent of Gen X buyers and sellers, respectively, identifying as Hispanic, black, Asian or other.
A third of buyers, 33 percent, said they were first-time buyers, while 32 percent of sellers said they were first-timers.
Among all buyers, 69 percent found the mortgage application and approval process either as not difficult or no more difficult than expected or easier than expected. There was little difference between the generations though slightly bigger shares of the very oldest and the very youngest buyers found the process more difficult than expected.
The 129-question survey had 7, 191 respondents and the resulting report was 136 pages.