How generational differences affect home buying preferences
Regardless of age, most buyers rely on real estate agents or brokers when buying a home. And although the internet is increasingly becoming a tool in the home buying process, many buyers continue to seek the help of professional agents to find the right property and negotiate the price and terms of the property. a sale. For this reason, it is essential that real estate agents and brokers have a thorough understanding of the needs and preferences of different groups of buyers.
To gather information on the similarities and differences between generations, the National Association of Realtors (NAR) analyzed survey responses from a representative sample of 8,212 Americans who purchased a primary residence between July 2019 and July 2020. buyers were broken down into age groups, each with distinct characteristics.
Below is a breakdown of the different characteristics and preferences of each generation of home buyers, according to NAR’s Generational Trends Report.
Gen Z (18 to 21 years old)
This generation of buyers is new to this year’s report and includes a sample too small (2%) to exhibit unique characteristics. However, the NAR survey indicates that homeownership is important for this age group. The association expects a larger sample of Gen Z in future reports.
Young millennials (ages 22-30)
Together, millennials represent the highest percentage of home buyers during the survey period at 37%. However, the generation was divided into two groups due to their distinct characteristics.
Young millennials make up 14% of the total number of buyers and have the highest number of newbies at 82%. The group also has the highest proportion of unmarried couples at 20%. More than a quarter, or 28%, of young Millennials are also likely to leave a family member’s home after buying a home, which is the largest of all age groups.
Older Millennials (31-40)
As a distinct group, older millennials make up 23% of the overall homebuying population – the second largest. Of this number, almost half, or 48%, are first-time buyers and 69% are married couples, which is the highest of all age groups. Older millennials are also the most educated age group, with 79% holding at least a bachelor’s degree.
Millennials are probably at the point in their lives when they are focusing on their professional careers. For this reason, they prefer to buy a house in urban areas, where the lifestyle amenities are easily accessible. According to the survey, âthe convenience of their workâ and travel costs are the main factors these groups take into account when buying a home.
Gen X (41 to 55 years old)
Gen Xers make up the largest generational group of buyers with 24%. Since many of them are probably at the peak of their professional careers, they are also the highest paying age group with a median income of $ 113,000. They also bought the second most expensive homes, averaging $ 305,000.
Generation X is the generation most likely to have children under the age of 18 at 61%. For this reason, they prefer homes with larger spaces, which is why they bought the larger homes averaging 2,100 square feet. The age group is also the most likely to buy a multigenerational home at 18%.
Young baby boomers (56 to 65)
Of all homebuyers during the survey period, 18% were young baby boomers. They have the most diverse reasons for buying a home among all generations, with the desire to own a home, be closer to family and friends, and live in a better neighborhood leading the way. listing. This group is most likely to purchase a new home for the amenities of new construction communities.
Older Baby Boomers (66-74)
Representing 14% of new home buyers, older baby boomers are the age group most likely to buy a newly built home at 19%. They also move the farthest distance from their old residence to their new homes at a median distance of 35 miles. This generation has the highest number of buyers who are single women (22%) and military veterans (30%).
Both groups of baby boomers expect to stay at home for an average of 20 years, the longest of any generation.
The Silent Generation (75 to 95 years old)
Excluding Gen Z, this generation represents the smallest share of buyers with 5%. Since most of these buyers are likely to have retired or reduced their work requirements, they have the lowest median household incomes. Many are also downsizing and prefer to be closer to family and friends. This age group is also the least likely to compromise on their housing search.
How do buyers finance the purchase of their home?
An overwhelming majority, 87%, of buyers financed their purchase during the period, with the share declining as the age group ages. Most younger buyers relied on their own savings for the deposit, while older buyers typically use the proceeds from the sale of their previous homes as a down payment. However, more than a quarter, or 28%, of Millennials have used a gift or loan from family or friends to buy a home – more than any other generation.
For most respondents, having debt was the biggest barrier to their ability to save for a deposit. This delayed their home buying plans for a median of three years and came mostly from student loans. The second biggest obstacle was the high rental cost.
More than two-fifths of young millennials reported having a median student loan balance of $ 25,000, while 37% of older millennials had a median balance of $ 33,000. Only 21% of Gen Xers reported having student loan debt, but they have a higher median balance of $ 35,000, which could have been accumulated from their children’s student loans, in addition to their personal student debt.
To save for the purchase of their home, the survey showed that most respondents cut back on spending on luxury or non-essentials, entertainment, clothing and vacations.