In 2013, the National Association of Realtors® (NAR) initiated an annual report that delves into buying and selling trends across generations. While the full report spans over 130 pages, we’ve gathered the key highlights from the 2023 edition to save you time and effort. If you’re interested in reading the complete report, you’ll find the link at the end of this article.
Exciting Trend Shift: Baby Boomers Take the Lead in Home Purchases, Surpassing Millennials
In a significant shift since the 2014 report, Millennials (ages 24-42) are no longer the largest group of homebuyers. The 2023 report reveals that Baby Boomers have claimed that spot with a 39% share. This comprises 23% for Younger Boomers (58 to 67 years old) and 16% for Older Boomers (68 to 76 years old).
Dr. Jessica Lautz, the NAR’s deputy chief economist, offers valuable insight into this change: “Baby Boomers currently hold the advantage in the homebuying market. Most of them are repeat buyers who possess housing equity, empowering them to realize their dream homes – whether it’s a retirement haven or a residence near loved ones. With improved health and extended lifespans, they are making housing decisions later in life.”
Curious about the reasons behind the surge in Boomer home purchases? Around 40% cited that it was simply the right time.
A Decline in First-Time Homebuyers
Considering the dominance of Baby Boomers in the homebuying landscape, it’s not surprising to witness a decline in first-time buyers. Seasoned buyers are more likely to transition from renters to homeowners, having already experienced the homebuying process. The breakdown indicates that a mere 8% of first-time homebuyers are Boomers, while 58% belong to the Millennial generation. Gen Xers (ages 43-57) still represent a significant portion of first-time buyers at 21%. The year-to-year decrease in all first-time homebuyers, as observed from the 2022 report to the 2023 report, amounts to 8%, dropping from 34% to 26%. This marks the lowest percentage since the NAR began collecting this data.
Generational Education and Income Differences
Among different generations, Gen Xers boast the highest incomes, closely followed by Older Millennials. On the other hand, Younger Millennials showcase the highest educational attainment, closely trailed by Older Millennials. Gen X homebuyers enjoy a median annual household income of $114,300, while Older Millennials boast $102,900. At $50,400, Gen Z (ages 18-23) demonstrates the lowest income; nevertheless, they are making strides in homeownership, accounting for 4% of all homebuyers. This represents a 100% increase from the previous year’s 2%. Granted, it’s a relatively small percentage overall, but purchasing a home at such a young age sets a strong foundation for a robust financial future.
48% of Younger Millennials hold either an associate or bachelor’s degree, while Older Millennials trail closely at 41%. Impressively, a staggering 80% of Younger Millennials possess an associate degree or higher. Given that Gen Z falls within the age range of 18-23, a significant portion hasn’t had the opportunity to obtain more than a high school diploma. However, we must express our admiration for the 2% of Gen Z homebuyers who hold a doctoral degree.
The Primary Motivation to Purchase a Home
Now that we know who the buyers are, their education, and income levels, let’s explore their motivations for homeownership.
Insights into Homebuyers’ Characteristics A remarkable 22% of all purchasers expressed a simple desire to own a home of their own. This desire peaks at 47% for Younger Millennials and gradually decreases with age. The second most popular reason is the desire to be closer to family, friends, or relatives, which serves as the primary motivation for 13% of all buyers. However, this percentage jumps to 21% for Younger Boomers (ages 58 and above), 20% for Older Boomers, and an impressive 33% for the Silent Generation (ages 77-97). Additionally, retirement emerges as the third most prominent reason motivating Boomers to buy homes. Considering that 39% of all buyers are Boomers, these compelling motivations drive relocations, home purchases, and sales.
While not directly part of the NAR report, it’s worth mentioning some common reasons we hear from our clients when discussing homeownership. These reasons include the ability to decorate according to personal preferences, having a yard for children and pets, building net worth, and fostering a sense of community. These align closely with the findings from the NAR report.
For a comprehensive understanding of the real estate landscape and the trends shaping it, we encourage you to explore the complete NAR report.
We are dedicated to providing you with valuable insights into the ever-changing real estate market. Whether you’re a first-time buyer, a seasoned homeowner, or an investor, our experienced team is here to guide you through the process and help you make informed decisions that align with your goals. Contact us today to learn more about the current trends and opportunities in the real estate market!
