Key Highlights
- Baby boomers have surpassed millennials and now make up 39% of home buyers – the most of any generation – an increase from 29% last year.
- Currently, 4% of buyers are from Generation Z, with 30% of them going straight from living in a family member’s home to becoming homeowners.
- All generations are moving farther when they move, but younger boomers (ages 58–67) are moving the farthest, a median of 90 miles away.
In the ever-evolving landscape of the real estate market, understanding generational trends in home buying is crucial for real estate professionals, sellers, and buyers alike. This analysis dives into the behaviors and preferences of different generations, ranging from the Silent Generation and Baby Boomers to Gen X, Millennials, and the emerging Gen Z.
We at Brickfront‘s Local Wahington DC Construction explore the dynamics at play in the housing market, highlighting key findings from the National Association of Realtors’ Sellers Generational Trends Report and examining how these trends impact the real estate ecosystem.
Baby Boomers: A Dominant Force
Baby Boomers have long been a significant force in the housing market. As they move into retirement, their home buying and selling decisions are often motivated by the desire to downsize, live healthier, or enjoy retirement closer to friends and family. Interestingly, Baby Boomers remained active in the market, not just as sellers but also as buyers, seeking properties that better fit their current lifestyles.
They have remained the largest home seller generation. This generation’s influence is further underscored by their financial capacity, with many Boomers having the highest median household income among the age groups, enabling them to make substantial equity real estate investments in Utah and beyond.
The combined share of younger boomer buyers (58 to 67 years old) and older boomer buyers (68 to 76 years old) made up the largest generation of home buyers as this increased to 39% in 2022 from 29% the year before, according to the 2023 Home Buyers and Sellers Generational Trends report, which looks at the similarities and differences of recent home buyers and sellers across generations.
The Older and Younger Millennials: First-Time Buyers and Beyond
Millennials, especially older Millennials, have become a formidable group in the homebuying market, with many entering as first-time buyers. This generation faces unique challenges, including personal affordability issues and the need for locations convenient to their jobs or family support systems.
Younger Millennials, on the other hand, are noted for their resilience and adaptability, often staying in family members’ homes to save for a down payment. Their approach to home purchase is marked by a blend of practicality and aspiration, with many seeking their dream home while navigating the complexities of financial investment in real estate.
Although almost half of millennials currently own homes, many of those who haven’t bought one think homeownership is becoming more and more unaffordable. A Bankrate Financial Security Survey indicates that 78% of aspiring homeowner millennials are prevented from doing so by personal economic concerns.
Since 2014, younger millennials (ages 24 to 32) and older millennials (ages 33 to 42) have been the largest group of customers; nevertheless, they saw their combined share fall from 43% in 2021 to 28% last year.
While older boomers sold their homes after 16 years, younger millennials stayed in their homes for an average of four years.
Gen X: The Balanced Middle
Twenty-four percent of recent homebuyers are from this generation. With a median income of $114,300 per household, they are the highest-earning homebuyers, which is probably why they have the most purchasing power.
Gen X buyers represent a balanced mix of first-time homebuyers and repeat buyers making housing trades. This generation is characterized by their practical approach to home purchase, focusing on family needs, job relocation, and the expected duration of a newly purchased home. They are also notable for their role in the homebuying market as experienced investors and as the largest generation of sellers, often motivated by the desire to upgrade or relocate for work or family reasons.
Gen Xers, defined as those born between 1965 and 1980, had largely established jobs before the collapse of the housing market and the accompanying recession. As a result, Gen Xers can earn more money than other generations, which helps to lower their cost of living. In 70 of the 100 most populous counties in the US, the typical Gen Xer can buy a home at the median price range, according to Business Insider. In contrast, just 34 counties’ median price point of a home is within the financial reach of Millennials.
More than any other age group, over three-quarters of Gen Xers, according to NAR, prefer detached single-family homes.
Silent Generation and Older Boomers: Downsizing and Equity
The Silent Generation and older Boomers are increasingly looking to downsize or make the most of their housing equity. For many in this age group, selling a family home can provide valuable financial flexibility in retirement, enabling them to enjoy their later years with less property maintenance and more freedom. Older Boomers, in particular, have shown a tendency to sell for reasons such as living healthier, proximity to friends and family, or simply the desire for a lifestyle change.
The Silent Generation had the highest share of married couples at 68%.
Emerging Trends: Gen Z and Younger Generations
As the youngest generation to enter the housing market, Gen Z’s preferences and behaviors are just beginning to be understood. Early indications suggest that Gen Z homebuyers prioritize location, affordability, and the quality of the living space. With a keen eye on financial investment, this generation is also showing an interest in real estate as not just a place to live, but a long-term investment. The aspirations of Gen Z, combined with their growing financial power, hint at a significant impact on future real estate trends.
18 to 23-year-olds, or Generation Z, now account for 4% of all house buyers, up from 2% in 2021. They also make up 3% of home sellers. Nearly one in three Gen Z buyers (i.e., 30%) went straight from living in a family member’s home to becoming homeowners. For this group of buyers, the most important thing during their home search was to choose a location convenient and close to friends and family.
“As the youngest generation of home buyers and sellers, it’s encouraging to see Gen Z entering the market,” said Dr. Jessica Lautz, National Association of REALTORS® deputy chief economist and vice president of research. “Their desire for homeownership is strong, and many are relying on family support systems to help make their first real estate purchase.”
The Role of Real Estate Agents
In navigating these generational trends, the role of real estate agents remains pivotal. Agents provide valuable advice and guidance to buyers and sellers across all generations, helping them to navigate the complexities of the market. From understanding the motivations and needs of first-time homebuyers to assisting older generations in downsizing or making equity-based trades, real estate professionals play a critical role in facilitating successful transactions.
A real estate agent was involved in the acquisition of properties for 86% of all purchasers. The highest percentage was seen in younger boomers (90%) and members of Generation X (88%). All generations of buyers concurred that the three main reasons they used real estate agents were to get assistance in selecting the ideal house to buy (49%), negotiating the terms of the sale (13%), and negotiating the price (11%). The majority of both younger and older millennials (12% and 14% respectively), said they would want their real estate professional to assist with paperwork.
“Owning a home is more than just a financial investment. It’s a symbol of stability, independence, and community that helps people build their lives and achieve their dreams,” said NAR President Kenny Parcell, a Realtor® from Spanish Fork, Utah, and broker-owner of Equity Real Estate Utah. “Whether you’re a first-time home buyer or an experienced investor, Realtors® have the expertise and knowledge needed to provide valuable advice and help you make informed decisions about your purchase.
Conclusion: A Dynamic Landscape
The real estate landscape is continuously shaped by the diverse needs, preferences, and financial capabilities of different generations. From Baby Boomers and Gen X to Millennials and the emerging Gen Z, each group brings its own set of challenges and opportunities to the housing market. Real estate professionals, armed with insights from reports like the Sellers Generational Trends Report, are better equipped to serve the varied needs of home buyers and sellers, ensuring a vibrant and dynamic real estate market for years to come.
In general, purchasers anticipated staying in their houses for 15 years, as opposed to 12 years in 2021. Compared to younger and older boomers, the projected duration for younger millennials was only 10 years. Remarkably, Generation Z anticipated spending 19 years in their freshly acquired house.
Every generation concurred that moving closer to friends and family was the most frequent cause for selling. Younger generations cited wanting a bigger house and moving due to job relocation as their top motivations to sell their house, while older generations stated the desire to sell due to retirement.
Individuals are traveling longer distances on average. The average distance relocated by buyers was 50 miles, the most amount ever noted and a considerable increase over the 15 miles moved the previous year. Younger generations migrated closer together; for example, younger and older millennials moved, on average, 15 miles apart. The younger boomers moved the furthest (90 miles), then the elder ones (60 miles), then the quiet generation (50 miles).
Understanding these generational trends is more than just a financial investment; it’s about recognizing the shifting dynamics of home buying and selling. As the market evolves, so too will the strategies of real estate agents, sellers, and buyers across all age groups, shaping the future of real estate in ways we are just beginning to comprehend.
FAQ
What is the average age of a first-time homebuyer?
The National Association of Realtors reports that the average age of a first-time buyer has increased to 36 as Americans put off major life decisions like marriage and children.
When should I start the homebuying process?
Years before you even begin your home search, the groundwork for homeownership is being built. Long-term goals include raising your credit score and setting aside money for a down payment. However, the speed at which you close a deal truly depends on your level of eagerness when you’re ready. It may take some time to locate a place in the low-inventory market of today. Before you go house-looking, you should definitely get preapproved for a mortgage, as this guarantees purchasers that you will be able to obtain financing. It often takes a few months to complete the actual house hunt, obtain a mortgage, and go to the closing table.