Millennial’s Home Buying Activity
“It’s a popular myth – the millennial generation is destined to be a generation of renters – avocado toast, anyone? With student loan debt burdens, the scars of the Great Recession, and limited housing supply, the myth is rooted in some real challenges for millennials. However, despite these challenges, millennials are not only interested in homeownership, they are the primary reason that the homeownership rate increased over the past year.”
Millennials held the highest share of home buying activity out of all other generations for the fifth consecutive year, according to the 2018 Home Buyer and Seller Generational Trends study from the National Association of Realtors.
According to NAR just over one-third of all home purchases were made by Millennials, who held a market share of 36% over the past year, up from 34% in 2017. Gen Xers ranked second at 26%, a drop from 28% in 2017, followed by the Baby Boomers with 32%, up from 30% in 2017 and the Silent Generation with 6%, down from 8% in 2017. NAR explained that Gen X buyers ranked second because Baby Boomers in the survey are segmented into two groups: younger Boomers, ages 52 to 61, and older Boomers, ages 62 to 70, and encompass a longer age period.
But while Millennials held a majority of the share in the home buying market, low levels of housing inventory and higher home prices held back many potential buyers.
Over the past year, the typical Millennial homebuyer had a higher household income at $88,200, compared to $82,000 last year, and purchased the same sized home at 1,800 square feet.
However, they paid a more expensive price for that home at $220,000, compared to $205,000 in 2017. Millennials also had higher levels of student debt than in last year’s survey, and slightly more of them said saving for a down payment was the most difficult task in buying a home.
“Realtors throughout the country have noticed both the notable upturn in buyer interest from young adults over the past year, as well as mounting frustration once they begin actively searching for a home to buy,” NAR Chief Economist Lawrence Yun said. “Prices keep rising for the limited number of listings on the market they can afford, which is creating stark competition, speedy price growth and the need to save more in order to buy.”
With all this database information it is catchy/ interesting to see what’s to come this upcoming years with millennials gradually making unpredictable moves in this economy there is no telling whether they will continue to buy or hold back. We have previously wrote a blog on how millenials have not been buying rather they have been renting. Among the trends Realtors are seeing in the younger home-buying generation, they are more likely to live closer to friends and family, rather than in select areas of the city or certain schools. They are also buying condos in the city at a very low rate, and are the most likely generation to use a real estate agent with 90% of Millennials purchasing through an agent.