Gleaming luxury condo towers with amenities like pools and swanky bars may monopolize the cool factor, but today’s pragmatic home buyers are clamoring for something different: affordable, single-family homes, often in the suburbs.
Yes, these surprisingly hot properties made up about 82% of homes purchased, according to the National Association of Realtors® 2019 Home Buyers and Sellers Generational Trends Report. They tend to have three bedrooms and two bathrooms, and clock in at roughly 1,900 square feet. Median sold price: $250,000. Parking spaces can go for that much—or more—in New York City.
The report is based on a 129-question survey filled out by nearly 7,200 people who bought a home between July 2017 and June 2018.
“All generations are pushed to the suburbs today for affordability and the types of amenities they’re looking for,” says Jessica Lautz, NAR’s vice president of research. “They’re looking for places that are convenient to their jobs and friends and family and in the school district of choice.”
More than half of buyers surveyed, 51%, flocked to the burbs. An additional 20% chose small towns, while 13% picked rural areas. That left just 14% of folks closing in urban areas—barely up from 13% the previous year.
Millennials were the most likely to be city dwellers, at 17%, a slight increase from 15% last year.
“People have an assumption that millennials want to live in urban areas, but that’s not necessarily true when they enter new life stages,” says Jason Dorsey, president of the Austin, TX–based research group Center for Generational Kinetics. “Urban areas are still expensive, and they’re increasingly expensive to raise children in. When they do go to buy that home, they are thinking about schools and the overall cost of living in that area, and they want more square footage.”
Who’s buying homes these days?
Whether folks are buying or selling a home, or both, it pays to understand who’s in the market.
Overall, the median buyer was 46 years old. But it’s millennials who are snapping up the most homes. They made up 37% of buyers. (Roughly 26% of all buyers were older millennials, aged 29 to 39, while the remaining 11% were still in their 20s.)
Boomers were the second-largest group of buyers, at 32%, followed by Gen Xers, at 24%, and the silent generation, at 7%.
First-time buyers of all ages made up a third of all home shoppers.
Most buyers are married, at about 63%. But single women made up the next largest group, at 18%—twice as many as single men. Unmarried couples made up 8% of buyers.
Most of the unattached women purchasing homes on their own were 54 and up, which may reflect midlife changes.
“Gray divorce is a big trend,” says Amy Lynch, a researcher and speaker at Generational Edge, in Nashville, TN. “I’m not surprised that single women are buying homes.”
These female home buyers tend to be doing well, with a median household income of $91,600 in 2017. They’re also overwhelmingly white, as 85% of new homeowners identified as such. Just 6% were Hispanic, 5% were black, 4% were Asian, and 3% identified as other.
“The homeownership rate for minorities has not rebounded since the recession,” says Lautz. These communities were hardest hit by the foreclosure crisis of a decade ago. Plus, she pointed out, African-Americans have more student loan debt after graduation and so may have less purchase power.
The top reason for purchasing a property was a desire to achieve the American dream of homeownership. About 29% of respondents cited this in the survey. Next up was wanting a bigger abode, at 9%; wanting to be closer to family and friends, at 8%; a job-related move, at 8%; a change in family circumstances, at 7%; and simply wanting to live in a nicer area, at 7%.
And folks typically aren’t going very far away. They’re moving only a median 15 miles from their previous residences.
But student debt continues to throw a wrench in homeownership plans, particularly for millennials and Gen Xers. About 47% of younger millennials reported having a median $21,000 in student loans to pay off. About 42% of the older members of this generation had median balances of $30,000.
“It doesn’t just impact their ability to make a monthly mortgage payment,” says Dorsey. “It really impacts their ability to save up for a down payment.”
Who’s buying the most expensive homes?
Members of Generation X, once labeled as slackers, are now raking in the most dough. This enabled them to snap up the most expensive homes on the market. Their homes cost a median $277,800—about 4.3% more than the previous year.
But space doesn’t come cheap, and this group really needs it. They were the most likely to purchase a home to accommodate kids who refuse to fly the coop and aging parents. Only 12% of all buyers purchased a multigeneration residence.
“Xers tend to be the parents of high schoolers and junior high kids,” says Generational Edge’s Lynch. “So many of their parents lost a lot of investments and/or their homes in 2007 and 2008. They’re either contributing to the [parents’] homes or they’re choosing to live in multigenerational homes.”
Only 14% of folks purchased newly constructed homes, with boomers the most likely to do so. That’s likely because these abodes aren’t cheap, at a median $315,300 in February, according to the most recent government data available. That’s about 26% more than a previously lived-in abode.
Who’s putting homes up for sale?
Sellers continued to rake it in, scoring a median 99% of their asking price. That helped them net a median $55,000 more on the sale of their home than they originally paid for it. That’s up from $47,500 last year.
Boomers listed the most properties, at 43%. Gen Xers were next, putting 25% of abodes on the market, followed by the silent generation, at 12%, and millennials, at 20%.
The most common reason for putting a home on the market was that it was too small. Sellers also wanted to be closer to family and friends, or had to relocate for a job.
Those 53 and younger were typically trading up to larger, pricier abodes. Meanwhile, those 54 and older tended to be doing the opposite: downsizing into smaller, cheaper homes.
“We don’t see as much downsizing” as in previous years, Lautz says. Those who do are losing only about 100 to 200 square feet in their new homes. “There’s less [smaller, inexpensive properties] available for these buyers.”
Source: Housing Trends Feed