A new study from the National Association of Realtors took a look at the differences between baby boomers, Gen Xers and millennials in regards to buying or selling homes.
The first findings revealed over 16 percent of Gen Xers purchased a multi-generational home, leading the way over young boomers and millennials. More than half of them said they made the purchase because their adult children either moved back home or never left.
As for millennials, the report found 9 percent bought a multi-generational home, with 33 percent of that group claiming it was to take care of their aging parents.
“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. “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 preferring homeownership over renting lines up with a survey released by Northshore Fireplace.
Of the 2,000 millennials between the ages of 22 and 37 surveyed, 45 percent said they expect their first purchase to be their “dream home.” Moving to find that perfect place was also in the cards, with 65 percent willing to relocate and 41 percent saying they would even go to another state.
According to the National Association of Realtors report, 37 percent of all buyers were millennials, “making them the most active buying generation for the sixth consecutive year.” However, for the first time, the NAR’s study split millennials into two groups, younger and older, because of the buying disparities between the age groups.
The buying breakdown was as follows:
Older Millennials – 26 Percent
Generation X – 24 Percent
Younger Baby Boomers – 18 Percent
Older Baby Boomers – 14 Percent
Younger Millennials – 11 Percent
The numbers speak for themselves – there’s a massive gap between older and younger millennials.
“Older millennials are now entering the prime earning stages of their careers, and the size and costs of homes they purchase reflect this,” Yun said. “Their choices are falling more in line with their Gen X and boomer counterparts.”
Not only do younger millennials have a lower median household income of $71,200 compared to the $101,200 of their older counterparts, but they’re also the most likely to have student loan debt.
The report goes on to state that 26 percent of younger millennials would say “saving for a downpayment was the most difficult task in the home process.”
To make matters worse, the Federal Housing Administration is toughening its underwriting standards for high-risk homebuyers.
Applicants with heavy debt, low credit scores and small downpayments will be under a microscope, with mortgage executives telling Florida Realtors “they are bracing for reductions in their FHA business by anywhere from 10 to 30 percent.”
The NAR study also looked into how likely buyers and sellers were to use a real estate agent.
A whopping 92 percent of younger millennials opted to purchase a home with the guidance of a realtor, citing “help understanding the buying process” as the number one benefit. The rest of the generations weren’t far behind, with 87 percent purchasing their property with an agent’s assistance.
As for sellers, Gen Xers made up the largest group at 25 percent. In total, 92 percent of sellers used a real estate agent during the selling process.
Melissa’s career in writing started more than 20 years ago. Today, she lives in South Florida with her husband and two boys.