It is no secret that Millennials continue to make up the largest group of homebuyers in the market, but it is important to understand how their homebuying habits differ. Learn how the homebuying trends of younger millennials are different from older millennials in the MReport article.
Multi-generational homes are the preferred choice for Gen-Xers and older millennials, according to the National Association of Realtors’ (NAR’s) 2019 Home Buyer and Seller Generational Trends study. However, the reasons they prefer to buy these homes are different.
The study found that while Gen Xers prefer to buy a multi-generational home because their adult children are moving in with them or never left home, older millennials who bought these homes were likely to do so 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’ home either out of necessity or an attempt to save money,” said Lawrence Yun, Chief Economist at NAR. “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.”
For the first time, the study also divided the millennial generation into older millennials and younger ones due to the disparity in their homebuying habits. While millennials as a whole continued to form the largest group of homebuyers of any generation at 37 percent of all buyers, younger millennials accounted for 11 percent of all buyers while older ones represented 26 percent of all homebuyers.
It indicated that younger millennials accounted for a larger buying share than the silent generation which stood at 7 percent of all buyers. Among millennial homebuyers, the study indicated that older millennials “have a median household income of $101,200 and purchase homes with a median price of $274,000, comparable to Gen Xers ($111,100 income, $277,800 median home price) and younger boomers ($102,300, $251,100 respectively).”
According to Yun, “Older millennials are now entering the prime earning stages of their careers, and the size and costs of homes they purchase reflect this. Their choices are falling more in line with their Gen X and boomer counterparts.”
On the other hand, younger millennials whose median income stood at around $71,000 were purchasing the least expensive and smallest homes due to the challenges of affordability.
When it came to downsizing, the study revealed that this wasn’t common among any of the generations at present. It indicated that sellers over the age of 54 only downsized by a median of 100 to 200 square feet as Gen Xers and boomers who might be interested in downsizing facing the challenges of smaller inventory. These sellers could also “have been impeded by the increase in multi-generational living these generations are reporting to accommodate the needs of adult children and aging parents.”