Survey finds Gen X and Gen Y more optomistic

Realty Builder

from National Association of Realtors

Millennials are more confident than any other age group that their recent home purchase was a good financial investment, according to a new study released last month.

The inaugural 2013 National Association of Realtors Home Buyer and Seller Generational Trends evaluated the generational differences of recent home buyers and sellers and found that while eight out of 10 recent buyers considered their home purchase a good financial investment, the number was even higher, 85 percent, for younger buyers under the age of 32.

The study found that the largest group of recent buyers was Generation X Americans, those born between 1965 and 1979, who comprised 31 percent of recent purchases, followed closely by Millennials, sometimes called Generation Y, those born between 1980 and 2000, at 28 percent.

Percentages of recent home purchases among prior generations was significantly lower, 18 percent were Younger Boomers, those born between 1955 and 1964; 14 percent were Older Boomers, Americans born between 1946 and 1954; and 10 percent were from the Silent Generation, those born between 1925 and 1945.

The median age of Millennial home buyers was 28, their median income was $66,200 and they typically bought a 1,700-square foot home costing $165,000. The typical Gen X buyer was 39 years old, had a median income of $93,100, and purchased a 2,100-square foot home costing $235,000.

The previous living arrangement of recent buyers varied greatly across the generations; among Millennials, 65 percent rented an apartment or house and 22 percent lived with their parents, relatives or friends; more than half of all Baby Boomer and Silent Generation buyers owned their previous residence.

The study found that older generations of home buyers prefer more recently built homes. Millennials typically bought homes built around 1986, nearly a decade older than the homes typically bought by the Silent Generation.

Younger buyers had a tendency to stay closer to their previous residence, often staying within 10 miles, whereas older buyers moved longer distances, typically more than 20 miles from their previous home.

Younger buyers were more likely to buy in an urban or central city area than older buyers; 21 percent of Millennials bought a home in an urban location compared to only 13 percent of Older Boomer and Silent Generation buyers.

The reason for buying a home also varies across the generations; younger buyers most often cited the desire to own a home of their own whereas older buyers wanted to be closer to family and friends. When it comes to factors influencing neighborhood choice, younger generations cited convenience to jobs, affordability of homes, and quality of the school district. Older generations placed higher importance on convenience to family and friends and healthcare facilities.

When it comes to a home’s green features, younger buyers placed higher importance on commuting costs than older generations who placed higher importance on a home’s energy efficient features and living in an environmentally friendly community.

Millennials tended to make more compromises with their home purchase than any other generation. Millennials most often conceded on the price and size of the home, lot size, distance from job and style of home; whereas nearly half of Older Boomer and Silent Generation buyers made no compromises on their recent home purchase.

As the age of recent buyers increases so does the rate of owning more than one home; among Millennials, 8 percent own more than one home, which could include either a vacation home or investment property; compared to 21 percent of Gen X-ers, 28 percent of Younger Boomers, and 27 percent of Older Boomers, and 26 percent of the Silent Generation.

Home buyers of all ages often begin the home buying process by looking online for properties for sales; however, the frequency of use of the internet to search for homes decreases as age increases. Ninety percent of Millennials frequently used the internet to search for homes compared to less than half of Silent Generation buyers. Younger generations of buyers were also more likely to find the home they purchased through the internet; older buyers most often learned about the home they purchased from their real estate agent.

Buyers of all ages gain many benefits from working with a real estate professional. Among the age groups, younger buyers are more likely to want an agent’s help understanding the home buying process, presumably because many are buying a home for the first time. Younger buyers were most often referred to their agent by a friend, neighbor or relative whereas older buyers were increasingly likely to work with the same agent they previously used to buy or sell a home.

When it comes to choosing an agent, reputation was important to buyers of all ages; however, younger buyers more often cited an agent’s honesty and trustworthiness as the most important factor compared to older buyers who most often cited the agent’s knowledge of the neighborhood – perhaps because older buyers tend to move further distances and may have less familiarity with area.

The median down payment for Millennials was 5 percent, considerably less than older generations of buyers whose down payment ranged from 8 percent for Gen X buyers to 22 percent for Silent Generation buyers. Younger buyers who financed their home purchase most often relied on savings for their down payment whereas older buyers were more likely use proceeds from the sale of a primary residence.

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