Regardless of age, most buyers rely on real estate agents or brokers when purchasing a home. And despite the internet increasingly becoming a tool in the home-buying process, many buyers continue to seek the help of professional agents in finding the right property and negotiating the price and terms of a sale. For this reason, it is vital for real estate agents and brokers to have a deep understanding of the needs and preferences of the different groups of home buyers.
To gather insights on similarities and differences across generations, the National Association of Realtors (NAR) analyzed survey responses from a representative sample of 8,212 Americans who bought a primary residence home between July 2019 and July 2020. The buyers were divided according to age groups, each showing distinct characteristics.
Below is a breakdown of the different characteristics and preferences of each generation of home buyers, according to NAR’s generational trends report.
Gen Z (ages 18 to 21)
This generation of buyers is new to this year’s report and comprises a sample that is too small (2%) to show unique characteristics. However, NAR’s survey indicates that homeownership is important to this age group. The association expects a larger sample of Gen Z in future reports.
Younger Millennials (ages 22 to 30)
Combined, millennials account for the largest percentage of home buyers during the survey period at 37%. However, the generation was divided into two groups because of their distinct characteristics.
Younger millennials represent 14% of the total number of buyers and have the highest number of first timers at 82%. The group also has the highest portion of unmarried couples at 20%. Over a quarter, or 28%, of young millennial buyers are also likely to move from a family member’s home after buying a house, which is the largest among all age groups.
Older Millennials (ages 31 to 40)
As a separate group, older millennials comprise 23% of the entire home buyer population – the second biggest. Of this number, almost half, or 48%, are first-time buyers and 69% are married couples, which is the highest among all age brackets. Older millennials are also the most-educated age group, with 79% holding at least a bachelor’s degree.
Millennials are likely at the point in their lives where their focus is on their professional careers. Because of this, they prefer to purchase a home in urban areas, where lifestyle amenities are easily accessible. According to the survey, “convenience to their jobs” and commuting costs are the top factors these groups consider when a buying a house.
Gen X (ages 41 to 55)
Gen Xers make up the largest generational group of buyers at 24%. As many are likely at the prime of their professional careers, they are also the highest-earning age group with a median income of $113,000. They also purchased the second-most expensive homes, averaging $305,000.
Gen Xers are the most likely generation to have children under the age of 18 at 61%. Because of this, they prefer homes with bigger spaces, which explains why they bought the largest houses with areas averaging 2,100 square feet. The age group is also the most likely to purchase a multi-generational home at 18%.
Younger Baby Boomers (ages 56 to 65)
Across all home buyers during the survey period, 18% was made up by younger baby boomers. They have the most diverse reasons for buying a home among all generations, with the desire to own a home, be closer to family and friends, and live in a better area topping the list. This group is the most likely to purchase a new home for the amenities of new construction communities.
Older Baby Boomers (ages 66 to 74)
Representing 14% of recent home buyers, older baby boomers are the most likely age group to a buy a newly built home at 19%. They also move the furthest distance from their old residence to their new homes at a median of 35 miles. This generation have the highest number of buyers who are single females (22%) and military veterans (30%).
Both groups of baby boomers expect to stay in their homes an average period of 20 years, the longest among all generations.
The Silent Generation (ages 75 to 95)
Excluding Gen Z, this generation make up the smallest share of buyers at 5%. As most of these buyers are likely to have retired or scaled back their work demands, they have the lowest median household incomes. Many are also downsizing and prefer to be closer to family and friends. This age group is also the least likely to compromise on their home search.
How do buyers finance their home purchase?
An overwhelming majority, or 87%, of buyers financed their purchase during the period, with the share decreasing as the age group gets older. Most younger buyers relied on their own savings for the deposit, while older buyers typically use proceeds from the sale of their previous homes as down payment. However, more than a quarter, or 28%, of younger millennials used a gift or loan from family or friends to buy a home – more than any other generation.
For most respondents, having debt was the biggest hindrance on their ability to save for a deposit. This delayed their home-buying plans by a median of three years and mostly came from student loans. High rental cost was the next biggest barrier.
More than two-fifths of younger millennials reported having a median student loan balance of $25,000, while 37% of older millennials have a median of $33,000. Only 21% of Gen Xers reported having student loan debt, but they have a higher median balance of $35,000, which could have been accumulated from their children’s educational loans, in addition to their personal student debt.
To save for their home purchase, the survey showed that most respondents cut back spending on luxury or non-essential items, entertainment, clothing, and vacations.