NAR Survey Finds Millennials are Taking Over
A new survey released today suggests concerns about younger buyers waiting in the wings are overblown. The 2015 National Association of REALTORS® Home Buyer and Seller Generational Trends study, which evaluates age-based differences of recent home buyers and sellers, found that the Millennial generation represented the largest share of recent buyers.
This was the second consecutive year that NAR’s study found that the largest group of recent buyers came from those who were 34 and younger, comprising 32 percent of all buyers in 2014 and 31 percent in 2013. Buyers aged 35 to 49, often considered part of Generation X, followed closely behind with a 27 percent share of 2014 sales. Millennial buyers represented more than double the amount of Baby Boomer buyers.
“Over 80 percent of Millennial and Gen X buyers consider their home purchase a good financial investment, and the desire to own a home of their own was the top reason given by Millennials for their purchase,” says Lawrence Yun, NAR chief economist. “Fixed monthly payments and the long-term financial stability homeownership can provide are attractive to young adults despite them witnessing the housing downturn and subsequent slow recovery in the early years of their adulthood.”
The survey also found that fears over younger consumers using the Internet to bypass real estate professionals aren’t necessarily credible either. While an overwhelming majority of all buyers (88 percent) search for homes online, most then purchase their home through a real estate agent, with Millennials using agents the most, at 90 percent.
“Nothing can replace the real insights and guidance REALTORS® deliver to help consumers navigate the complex buying and selling process,” says NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark.
Methodology: NAR mailed a 127-question survey in July 2014 using a random sample weighted to be representative of sales on a geographic basis. A total of 6,572 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 9.4 percent. The recent homebuyers had to have purchased a home between July of 2013 and June of 2014.
Still, challenges remain for these younger buyers. Yun says their share of purchases would be higher if not for the numerous obstacles they face: “Many Millennials have endured underemployment and subpar wage growth, and rising rents and repaying student debt have made it very difficult to save for a downpayment. For some, even forming households of their own has been a challenge.”
The survey also found these common characteristics of younger buyers in 2014:
- The median age of Millennial homebuyers was 29, their median income was $76,900 (up from $73,600 in 2013) and they typically bought a 1,720-square foot home costing $189,900 ($180,000 a year ago).
- The typical Gen X buyer was 41 years old, had a median income of $104,600 (up from $98,200 a year ago) and purchased a 1,890-square foot home costing $250,000 (same as last year).
- Generation X buyers were the most likely to be married (68 percent), and Millennial buyers were more likely (compared to other generations) to be part of an unmarried couple (14 percent).
- On their primary reason for purchasing a home, a desire to own a home of their own was highest among Millennials at 39 percent. A change in a family situation – likely the birth of a child – was the highest (13 percent) among Gen X buyers.
- The share of Millennials buying in an urban or central city area increased to 21 percent in the past year (19 percent a year ago), compared with only 12 percent of older boomers.
- In terms of neighborhood choice, Millennials were most influenced by the quality of the neighborhood (75 percent) and convenience to jobs (74 percent). Convenience to schools was most desired by Gen X buyers.