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IMPORTANT STUFF YOU NEED TO KNOW!

Millennials lead the charge with Home Purchases


Younger generations still value owning a home despite the challenges in affordability, a new study found. (CoStar)

CoStar News

April 4, 2024 | 5:12 A.M.


As we have been sharing in our Market Update, the Millennials have come to peak home buying, marrying, and household formation years. This NATURAL DEMAND is not going away, and is what will insulate home values for many years to come.


Millennials Buy a Bigger Share of Homes Than Baby Boomers Despite Hefty Price Tags.


Home prices are near all-time highs, but new data shows that’s not deterring millennials from buying a bigger share of houses than baby boomers.


Millennial buyers — those between the ages of 25 and 43 — were the largest group of homebuyers from July 2022 through June 2023, according to the National Association of Realtors’ 2024 Home Buyers and Sellers Generational Trends report released Wednesday.


That’s a “significant shift in the housing market’s demographic landscape,” the trade group behind the study said in a statement.


The results highlight the persistent demand for homes especially among younger buyers despite big price tags and lofty mortgage rates. The findings signal that young buyers aren't waiting for the Federal Reserve to start cutting interest rates. That's a dynamic that could pose a challenge for apartment owners and developers who have benefited from renters staying put.


Millennials "are finding ways to overcome the hurdles in the housing market," Jessica Lautz, NAR deputy chief economist and vice president of research, told CoStar News.


The report found that 38% of recent homebuyers were millennials, an increase from 28% in 2023. Those buyers outnumbered the baby boomers — identified as buyers ages 59 to 77 — who made up only 31% of the homebuying market.


“The generational tug-of-war between millennials and baby boomers continued this year," Lautz said in the statement. Millennials’ "notable rise is attributed to both younger millennials stepping into homeownership for the first time and older millennials transitioning to larger homes that suit their evolving needs."


At the same time, the number of first-time buyers across all generations increased to 32%, up from last year’s 26% share, according to the report. Seventy-five percent of younger millennials, ages 25 to 33, and 44% of older millennials, ages 34 to 43, were first-time buyers.


Home Buyers Trending Younger


Lautz said an increase in household income could be one of the ways first-time buyers across generations are navigating difficult market conditions.


"We know that they're higher-income earners. If they're not using generational transfers of wealth, they may also be using stocks or financial assets to enter into homeownership," she said.


Gen Z homebuyers, those aged 18 to 24, entering the market also exhibited new trends.


While Gen Zers only made up 3% of homebuyers, 31% of those buyers were single females, part of a growing movement in homeownership demographics.


“Gen Z buyers are entering the housing market, and their demographics are emerging distinctly from other age groups," Lautz said. "More than half are single buyers, outpacing all age groups of single men and single women, and they are also most likely to identify as LGBTQ+.”




Homeownership Valued


The rise in younger homebuyers indicates the value of homeownership, even in the face of challenging market influences.


Between July 2022 and June 2023, home prices reached a fever pitch before slightly falling, according to data from the U.S. Census Bureau and the St. Louis Federal Reserve.


In the third quarter of 2022, the median home price was $468,000. Prices peaked at $479,500 during the fourth quarter of 2022, and by the end of the survey period, they’d fallen to $418,500.


During that same time, the 30-year fixed mortgage rate climbed from 5.7% to 6.7%, data from Freddie Mac compiled by the St. Louis Fed showed.


NAR’s report found that to afford these prices, millennial homebuyers made a median income between $106,000 and $127,700. Meanwhile, the boomers made between $104,000 and $182,700.


There was also little wiggle room from asking prices: The median purchase price was 100% of the asking price across every generation except Gen Z, and a quarter of all buyers paid more than the asking price.



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Content by Vidona Residential Columbia Realtors

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