With high house prices dominating headlines so often these days, and thousands of people shifting every year to a new home, NATIONAL ASSOCIATION OF REALTORS®, Research Division, just published “2015 National Association of Realtors® Home Buyer and Seller Generational Trends Report”.
NAR mailed out a 127-question survey using a random sample weighted to be representative of sales on a geographic basis to 72,206 recent home buyers. A total of 6,572 responses were received back.
The main findings are listed below.
- Gen Y constitutes the largest share of home buyers at 32%, which is larger than all “Baby Boomers” together. Younger boomers make 16 % and older boomers make 15 % of last year’s home buyers. “Generation X” has 27 percent of buyers and the “Silent Generation” has the smallest share of home buyers at 10 percent.
- Amongst the Silent Generation, only three percent of buyers are first-time buyers.
- 13% of all buyers bought a multi-generational home. They live with adult children over the age of 18, and/or their aging parents.
- Gen Y has the largest share of first-time buyers at 68%. The proportion of first-time buyers declines as age increases.
- Thirty-nine percent of Gen Y buyers primarily purchased a home just for the desire to own a home of their own. Gen X placed high importance on owning a home of their own, but many needed to move for a change in a family situation or a job-related relocation. Older Boomers are more likely to move for retirement, the desire to be closer to friends, family, and relatives, and the desire for a smaller home, while Younger Boomers are likely to move for a job-related relocation and to downsize.
- As age raises among recent home buyers, the rate of owning more than one home also increases.
- At least 80 percent of buyers who are aged 59 and younger bought a detached single-family home, while it is increasingly common for buyers over the age of 59 to purchase townhouses and condos.
- Thirteen percent of buyers over the age of 49 purchased a home in senior-related housing for themselves or others. This is most common for buyers over the age of 69, a category in which nearly one-quarter of buyers purchased a home in senior-related housing.
- Gen Y and Gen X tend to stay close to their previous residence, often staying within 15 km, while Older Boomers tend to move the longest distance 50 km and the Silent Generation tends to move 30 km from their previous home.
- Younger buyers tend to buy older homes and are more likely to buy previously owned homes. Most often they do so because the home is a better price and better overall value. Older Boomers and the Silent Generation are more likely than other generations to purchase a new home, most often doing so to avoid renovations or problems with plumbing or electricity and for the amenities in new home construction communities.
- Neighborhood factors that are important to buyers show strong connections to the buyer’s generation. Gen Y places the highest preference compared to other generations on convenience to the job as well as affordability of homes. As buyers’ children reach school age, the quality of school districts and convenience to schools starts to have larger importance—this is most often true for Gen X. Older Boomers and the Silent Generation place a higher priority on convenience to friends and family and convenience to health facilities.
- Younger buyers placed high importance on commuting costs, while older buyers placed higher importance on landscaping for energy conservation and energy-efficient lighting.
- The older the home buyer, the fewer compromises the buyer tended to make with their home purchase—48 percent of the Silent Generation made no compromises on their home purchase. Younger buyers tended to make sacrifices on the price of the home, size of the home, and condition of the home purchased.
- After finding the home they wanted, Gen Y and Gen X expect to live in their home for 10 years before moving on. Younger Boomers and the Silent Generation expect to live in their home for 15 years and Older Boomers plan to live in their home for 20 years. It should be noted that expected tenure is generally longer than actual tenure in a home. The Home Search Process
- Among all generations of home buyers, the first step in the home buying process is looking online for properties for sale. Gen Y is most likely among generations to also look online for information about the home buying process, while the Silent Generation is most likely to contact a real estate agent as a first step.
- As age increases, the search time for a home decreases. Buyers under 50 tend to search for a home for 11 weeks before finding a home. Buyers over the age of 49 tend to look for 8 weeks.
- Younger generations of buyers typically find the home they purchase through the Internet, while older generations of buyers first found the home they purchased through their real estate agent.
- The frequency of internet use in the home search process was directly related to age. Younger buyers are not only more likely to use the internet during their search, but they also use the internet more frequently during their home search process. Older buyers are more likely than younger buyers to be more occasional users during their home search.
- More than half of Gen Y and Gen X buyers used a mobile device during their home search. Among those who did, 31 percent of Gen Y and 26 percent of Gen X found the home they ultimately purchased via a mobile device.
- Homebuyer satisfaction with the home buying process increases as age increases. This may be due to not only tightened inventory in lower price brackets, but also realistic expectations of older buyers who are often repeating buyers. Home Buying and Real Estate Professionals
- Buyers gain many benefits from working with a real estate agent. Among age groups, younger buyers are more likely to want the agent to help them understand the process as they are more likely to have never purchased a home before. Buyers all benefit from their agent pointing out unnoticed features and faults in a property. All buyers most want their agent to help find the right home to purchase.
- Younger buyers were predominately referred to their agent by a friend, neighbor, or relative, while older buyers were more likely to use an agent again that they previously used to buy or sell a home.
- When choosing an agent, younger buyers were more likely to place the agent’s honesty and trustworthiness of more importance than older buyers, while older buyers rate the agent’s reputation as a higher factor. Older Boomers who are often moving longer distances rate their knowledge of the neighborhood as an important factor perhaps because Older Boomers tend to move longer distances and may not necessarily know the neighborhood.
- Younger buyers tend to place higher importance than older buyers on agents’ communication via email and text messages, while older buyers place higher importance on personal calls. Financing the Home Purchase.
- Overall 88 percent of recent buyers financed their home purchase. Nearly all (97 percent) of Gen Y buyers financed compared to just 61 percent of Silent Generation buyers.
- When financing the home purchase, younger buyers also financed larger shares—the typical Gen Y downpayment is seven percent and Gen X is 10 percent compared to 22 percent among the Silent Generation.
- Buyers have a variety of sources for a downpayment on a home. The source is predominately savings for younger buyers, while older buyers are more likely than younger buyers to use proceeds from a sale of a primary residence. Younger buyers are also more likely to use a gift or loan from a relative or friend.
- Twelve percent of buyers overall cited saving for a down payment was difficult. Among these buyers, 50 percent reported credit card debt, 46 percent of buyers reported student loans, and 38 percent car loans were the debt that held them back from saving. This was most common among Gen Y and Gen X buyers who are most likely to use savings as a downpayment source— 22 percent of Gen Y and 15 percent of Gen X had a difficult time-saving. Among this 22 percent of Gen Y, 54 percent reported student loans held them back from saving. Among the 15 percent of Gen X, 41 percent found credit card debt held them back from saving.
- Despite record housing affordability, many buyers are still making financial sacrifices. About half of Gen Y and Gen X buyers made sacrifices. Common sacrifices were cutting spending on luxury or non-essential items, cutting spending on entertainment, or cutting spending on clothes.
- Younger buyers were considerably more optimistic that their home purchase was a good financial investment in comparison to older buyers. Eighty-four percent of buyers under 34 considered their purchase a good financial investment compared to 72 percent of buyers 69 years of age and older. Home Sellers and Their Selling Experience
- Among the generations, Gen X (27 percent) is the largest group who are recent home sellers followed by both Older Boomers (23 percent) and Younger Boomers (20 percent).
- Gen Y is the largest share of married couples among sellers. The Baby Boomers had the lowest share of married couples among sellers. Older Boomers have the highest share of single female sellers.
- Seventy-five percent of Gen Y sellers are first-time sellers compared to just eight percent of sellers in the Older Boomer segment and 11 percent of Silent Generation sellers.
- Older buyers tend to move further distances and are more likely than younger buyers to buy in other regions and less likely than younger buyers to buy in the same state as the home sold.
- There is a clear trend of moving to larger, higher-priced homes for Gen Y and Gen X, moving into a similar home for Younger Boomers, and downsizing in both square footage and price for Older Boomers and the Silent Generation.
- The reasons for selling a home vary, however, for younger buyers many want to upgrade to a larger home or to accommodate job relocation. In comparison, for older buyers, many want to be closer to friends and family and buy a smaller home due to retirement.
- Sixteen percent of sellers wanted to sell their home earlier than they were able to but waited or stalled because their home was worth less than their mortgage. This is most common among Gen X (23 percent) sellers. Among Gen Y and Younger Boomer sellers, this occurred among 17 percent of sellers.
- Typically, the older the home seller, the longer the tenure in their home has been—this is a factor in fewer sellers who had to stall the sale of their home. Gen Y typically owned their home for five years while Older Boomers and the Silent Generation owned their homes for 13 years before selling. Home Selling and Real Estate Professionals
- All age groups of sellers are most likely to find their selling agent by referral from a friend, neighbor or relative or use an agent that they previously used to buy or sell a home.
- Younger sellers are more likely to use the same real estate agent or broker for their home purchase than older sellers, likely as they are typically moving closer to their previous residence.
- Youngers sellers typically want their selling agent to price their home competitively and help sell the home within a specific timeframe, while older sellers are more likely to want their selling agent to help the seller market the home to potential buyers. This is likely due to the reasons behind moving, as younger sellers are more likely to need to move for a larger home or for a job relocation—seemingly more time-sensitive, while older sellers are more likely moving due to retirement and to be closer to friends and family.
- Middle-aged sellers are more likely to initiate discussions about compensation with their real estate agent than both younger and older sellers.
