Written by Mike Cooke March 20, 2018
A lot of ink is spilled (or these days, you might say “a lot of gigabytes are disseminated”) on the impact of the Millennial generation on residential real estate.
Conventional wisdom has it that Millennials are living in their parents’ basements and are priced out of the market. On the other hand, news abounds that Millennials lead the way in home buying. About 36% of all home buyers in 2017 were Millennials, higher than any other generational group.
Less noticed, but equally impactful, are the Baby Boomers. They were 32% of all buyers in 2017 and made up 45% of all sellers.
Millennials and Boomers have more similarities than differences when it comes to buying and selling homes and many of them will surprise you. We’ll list a few in a moment but first let’s think about an issue that few notice when analyzing real estate from a generational perspective.
The issue? There is no agreed upon definition of when the various generations start and end. When you hear people talk about Gen X or the Greatest Generation, you can’t be sure which definition they’re using.
The one exception is Baby Boomers. It’s the only generation officially recognized by the Census Bureau, which it defines as people born between 1946 and 1964. Everyone accepts these dates for Boomers, although some further segment this group into Older Boomers (1946 thru 1954) and Younger Boomers (1955 thru 1964).
On the other hand, there is wide disagreement on dates for Millennials. You’ll see dates starting anywherebetween 1977 and 1984. Ending dates can range from 1995 to 2004. You can read two different studies about Millennials but can’t be sure that each is talking about the same group of people. It might not be a kumquats to kumquats comparison.
HOME BUYING AND SELLING HABITS OF MILLENNIALS AND BOOMERS
The study we’re using for reporting on the home buying and selling habits of Millennials and Boomers defines Millennials as people born from 1980 through 1998. While the study breaks Boomers into the younger and older subgroups, we’ve combined the data and report on Boomers as a whole, meaning people born from 1946 thru 1964. Thus, both groups span a 19-year time frame.
With this definitional matter out of the way, how do these two generations compare when it comes to residential real estate?
- Numbers: Both generations have equal numbers of people – around 75 million each. These two groups are 60% of the adult population in the United States and account for 68% of all buyers and 67% of all sellers.
- Income: Surprisingly, Millennials and Boomer buyers have similar median incomes at around $88,000 annually. Even more unexpectedly, Millennial sellers are richer than Boomers with median income at $105k versus just $90k for the older people.
- Marital Status: It’s almost indistinguishable with 65% of both generations consisting of married folks.
- Location: While it is conventional wisdom that Millennials prefer urban settings, the stats show they select suburban homes 52% of the time … very similar to Boomers, where 49% buy in the burbs.
- Motivations: Here there is a lot of disparity. “Getting closer to family and friends” was a prime concern for older Boomers, with 25% saying it was the No. 1 reason for making a move. Only 2% of Millennials rated this as the most important factor.
- Timing: Right around half of those surveyed in both generations say they made a move when they did because it was the right time given their personal circumstances. Market forces, either favorable (low interest rates) or unfavorable (low inventory, challenging affordability), don’t seem to be a big driver. People will buy or sell when their personal life situations dictate that the time is right and will do so almost in spite of what’s going on with the market.
- New versus Resale Homes: Boomers are twice as likely to buy a new home compared to Millennials … 20% of the oldsters bought new versus only 11% of the youngsters going for that option.
- Property Type: Both generations are opting for detached, single family properties at a rate of 85% for Millennials and 81% for Boomers.
- Price: There is not as big a difference as we expected. The median price of homes bought by Millennials was $220k versus $245k for Boomers. When selling and buying another property, Millennials tended to buy a home $30,000 more expensive than the one they just sold and Boomers, on average, bough less expensive by $25,000.
- Use of Agents: It’s high (and identical) for both groups, with 9 out of 10 using a real estate agent to guide them through a sale or purchase. Use of agents in general has steadily risen over the last 15 years and is at an all-time high.
- Satisfaction with the Process: Whether buying or selling, both groups were pleased with the service from their agents, with 89% to 94% saying they were satisfied or very satisfied.
Both Millennials and Baby Boomers are making significant contributions to the current health of the residential real estate market and they share more in common than is normally supposed.