Millennials held the highest share of home buying activity out of all other generations for the fifth consecutive year, according to the 2018 Home Buyer and Seller Generational Trends study from the National Association of Realtors.
Just over one-third of all home purchases were made by Millennials, who held a market share of 36% over the past year, up from 34% in 2017. Gen Xers ranked second at 26%, a drop from 28% in 2017, followed by the Baby Boomers with 32%, up from 30% in 2017 and the Silent Generation with 6%, down from 8% in 2017.
NAR explained that Gen X buyers ranked second because Baby Boomers in the survey are segmented into two groups: younger Boomers, ages 52 to 61, and older Boomers, ages 62 to 70, and encompass a longer age period.
But while Millennials held a majority of the share in the home buying market, low levels of housing inventory and higher home prices held back many potential buyers.
Over the past year, the typical Millennial homebuyer had a higher household income at $88,200, compared to $82,000 last year, and purchased the same sized home at 1,800 square feet.
However, they paid a more expensive price for that home at $220,000, compared to $205,000 in 2017. Millennials also had higher levels of student debt than in last year’s survey, and slightly more of them said saving for a down payment was the most difficult task in buying a home.
“Realtors throughout the country have noticed both the notable upturn in buyer interest from young adults over the past year, as well as mounting frustration once they begin actively searching for a home to buy,” NAR Chief Economist Lawrence Yun said. “Prices keep rising for the limited number of listings on the market they can afford, which is creating stark competition, speedy price growth and the need to save more in order to buy.”
“These challenging market conditions have caused – and will continue to cause – many aspiring Millennial buyers to continue renting unless more Gen Xers decide to sell, and entry-level home construction picks up significantly,” Yun said.
But because of some of these challenges, the market has also seen an increase in multigenerational homes as more adult children opted to live at home with their Gen X or Baby Boomer parents, increasing from 30% last year to 39%.
Among the trends Realtors are seeing in the younger home-buying generation, they are more likely to live closer to friends and family, rather than in select areas of the city or certain schools. They are also buying condos in the city at a very low rate, and are the most likely generation to use a real estate agent with 90% of Millennials purchasing through an agent.
Millennials answered that the top benefit their agent provided was understanding the buying process, and their share of 90% is up from about 84% from every other generation.