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WASHINGTON â€“ March 12, 2015 â€“ A new survey released today suggests that concerns about younger buyers are overblown. They’re not “waiting in the wings” to buy a home â€“ many are already owners or preparing to become one.
The 2015 National Association of RealtorsÂ® (NAR) Home Buyer and Seller Generational Trends study, which evaluates age-based differences in recent home buyers and sellers, found that the millennial generation represented the largest share of recent buyers.
It was the second consecutive year that NAR’s study found that the largest group was age 34 and younger: 32 percent of all buyers in 2014 and 31 percent in 2013, and more than double the amount of baby boomer buyers.
Buyers aged 35 to 49, often considered part of Generation X, followed closely behind the millennials with a 27 percent share of 2014 sales.
“Over 80 percent of millennial and Gen X buyers consider their home purchase a good financial investment, and the desire to own a home of their own was the top reason given by millennials for their purchase,” says Lawrence Yun, NAR chief economist. “Fixed monthly payments and the long-term financial stability homeownership can provide are attractive to young adults, despite them witnessing the housing downturn and subsequent slow recovery in the early years of their adulthood.”
The survey also found that industry fears about younger consumers using the Internet to bypass real estate professionals aren’t necessarily credible. While most buyers (88 percent) search for homes online, they still purchase their home through a real estate agent â€“ and millennials use agents the most at 90 percent.
“Nothing can replace the real insights and guidance Realtors deliver to help consumers navigate the complex buying and selling process,” says NAR President Chris Polychron.
Still, challenges remain for younger buyers. Yun says their share of purchases would be higher if not for the obstacles they face: “Many millennials have endured underemployment and subpar wage growth, and rising rents and repaying student debt have made it very difficult to save for a downpayment. For some, even forming households of their own has been a challenge.”
The survey found these common characteristics of younger buyers in 2014
The median age of millennial homebuyers was 29, their median income was $76,900 (up from $73,600 in 2013), and they typically bought a 1,720-square foot home costing $189,900 ($180,000 a year earlier).
The typical Gen X buyer was 41 years old, had a median income of $104,600 (up from $98,200 a year ago) and purchased an 1,890-square foot home costing $250,000 (same as last year).
Generation X buyers were the most likely to be married (68 percent), and millennial buyers were more likely (compared to other generations) to be part of an unmarried couple (14 percent).
The primary reason for purchasing â€“ a desire to own a home of their own â€“ was highest among millennials at 39 percent. A change in a family situation â€“ likely the birth of a child â€“ was highest (13 percent) among Gen X buyers.
The share of millennials buying in an urban or central city area increased to 21 percent in the past year (19 percent a year ago), compared with only 12 percent of older boomers.
In choosing a neighborhood, millennials were most influenced by the quality of the neighborhood (75 percent) and convenience to jobs (74 percent). Convenience to schools was most desired by Gen X buyers.
The complete survey is posted online and can be downloaded.
Source: “NAR Generational Survey: Millennials Lead All Buyers, Most Likely to Use Real Estate Agent,” NAR (March 11, 2015).
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