It wasn’t long ago that real estate was deemed toxic, untouchable, whatever bad thing you want to call it.
But times have changed, thanks to low interest rates and massive price cuts. And one group seems to be taking advantage, namely, the Millennials.
If you’re not familiar, they are a group of youngsters born between 1980 and 1995, who also go by the name “Generation Y” and “Generation Next.”
Interestingly, it is this group that purchased the most real estate between July 2012 and June 2013, according to the 2014 NAR Home Buyer and Seller Generational Trends study released today.
Gen Y = Largest Share of Recent Home Buyers
Millennials don’t just text, play around on Twitter, and create cool Tumblr blogs. They also make money and buy things.
In fact, the group accounted for 31% of recent residential real estate purchases, leading all other generational groups.
At the same time, Generation Next had the smallest share of home sellers at just 12%, which makes sense given the young age.
The median age of a Millennial home buyer was 29 and median income was $73,600. An overwhelming 75% were first-home home buyers.
They were most likely to buy a property in an urban or central city area and stay in their homes for 10 years.
Interestingly, they purchase homes primarily for the “desire to own” a home, not to get rich.
In the home buying department, they were followed very closely by Gen X, which includes individuals born between 1965 and 1979.
For the record, I am part of Gen X, though just barely seeing that I was born in the summer of 1979. My group accounted for 30% of recent home purchases and the largest share of home sellers at 29%.
I’m assuming there was a lot of buying and selling in my generation because there were those that bought early and are now unloading, perhaps because of newly gained home equity.
Though 19% indicated that they had to pump the brakes on a home sale because of equity constraints.
Then there are those that did not buy during the boom, and wanted in after prices and rates tumbled. Fortunately for this latter group, they probably have good jobs, plenty of assets, and decent credit.
Gen X buyers plan to stay in their current homes for 15 years, and are most likely to think their home is a good financial investment (87%).
Boomers Aren’t Booming Anymore
The other generations in the study included Younger Boomers (1955-1964), Older Boomers (1946-54), and the so-called Silent Generation, those born between 1925 and 1945.
All three groups were relatively quiet on the home buying front, with 16% of recent home purchases coming from Younger Boomers, 14% from Older Boomers, and just nine percent from the Silent Generation.
This all makes sense, given the fact that most from these generations are already established and in homes they purchased years ago.
Most from these groups, along with Gen Xers, bought homes in suburban areas, as opposed to the city.
And roughly a quarter of both sets of Boomers own more than one home, including an investment property and/or vacation home.
Almost nine out of 10 buyers used a mortgage to purchase their home, and the all-cash share increased with age, as expected.