Who’s Buying What? Exploring Home Buyer Generational Trends

Millennials are getting busy buying homes, and often for the first time. That’s according generational insights from a recent National Association of Realtors (NAR) report. Understanding generational trends can provide valuable insights into dynamics of homeownership, from what buyers value the most to who’s active. 

Home Buying Trends

Home buyers and sellers across different generations, including Millennials, Gen Xers, Baby Boomers, and the Silent Generation, are showing unique characteristics and preferences based on their stage of life. These generational trends help real estate professionals and home builders understand the kind of homes that appeal to today’s buyers.

Millennials Are the Most Active Buyers

One of the report’s key findings is the increasing prominence of Millennials–those aged 25 to 43– made them the largest demographic buying homes today. Despite facing challenges such as student loan debt and rising housing costs, Millennials made up 38% of home buyers in 2023. 

However, the impacts of carrying higher debts longer and rapid home appreciation on this generation were evident in other ways. For instance, nearly three out of every four younger millennials, or those 25-33 years old, were buying a home for the first time. Around a quarter of these were moving directly out of a family member’s home into their new home. In those 34-43, 44% were first-time home buyers. 

These buyers heavily relied on savings and gifts to afford their home purchase. In the case of younger millennials, 24% used gifts or a loan from a friend or family member to help with a down payment. This group was still carrying student loans, with 41% paying off a median debt of $30,000. Fewer older millennials still had student loans–35%–but their median debt was higher, at $40,000.

This debt was a key reason why their home purchase plans were delayed. 

They also prized convenience in their jobs and cutting down on the commute. The generation likes living near amenities, but there seems to be a spilt. Younger millennials and those without kids lean toward cities, while older millennials are shifting to suburbs. Either way, the group prizes perks like walkability to schools and parks. 

Because more of them are working from home, and the integration of technology into their lives, the generation looks for features like internet speed, smart home integrations, and energy-efficient features. 

Gen X Stays In Place

Generation X showed they were happy to stay in place for now, as they represented only 4% of home buyers in 2023. This generation, aged 44-58 years, had a median income of $126,900 and purchased homes about 1,940 sq ft in size. If they were moving, they would most likely do so because of a job relocation. 

According to the National Association of Home Builders (NAHB), this generation strongly preferred single-family homes in suburbs and desired more space and community. Home function matters to them, and they find amenity-rich communities appealing.

[Highlight text box: Home function matters to Gen X, and they find amenity-rich communities appealing.]

They were also the most likely to buy a multi-generational home, either to accommodate aging parents or their boomerang kids looking to save money as they start their careers.

Baby Boomers Pivot

Home-buying activity ticked up for Baby Boomers aged 59 to 77. Combined, they were behind 31% of real estate transactions in 2023. Younger boomers, those 59 to 68, were more likely to be buying homes, at 19% to 12%. 

Their reasons for buying a home were more diversified, but the underlying motivation had a common thread: retirement. In preparation for their golden years, this group was looking at moving closer to friends or family, downsizing, or living in more affordable areas of the country. 

Even though Baby Boomers make up 20% of the country’s adult population currently, they own an outsized number of homes. Around 54% of all US homeowners are 55 or older. 

And not all of them are interested in moving. Many cite a desire to age in place over moving in with family, senior housing, or an assisted living facility. Plus, many have paid off their home mortgage. The thought of possibly owing another one, and at higher interest rates, does not appeal to a generation now transitioning to life on a fixed income.

Silent Generation Prioritizes Convenience

The oldest segment of home buyers, those 78 to 98 dubbed the Silent Generation, were behind 4% of purchased real estate. Typically buying to be closer to family, they also prioritized being near health facilities or were most likely to buy senior-related housing. A median-sized home was 1,800 sq ft.

Generation Z

Their opposites, Generation Z, were starting their home ownership journeys. Just 3% of buyers fell into the 18 to 24 age group. Back in 2022, around of quarter of these buyers had assistance to help with the down payment. They’re also more likely to buy older homes at smaller square footage and to buy in lower-cost markets. Think mid-sized cities like Indianapolis, Virginia Beach, and Detroit.

The NAR report on Home Buyer and Seller Generational Trends provides valuable insights into the real estate market dynamics, highlighting the diverse preferences and behaviors of different generations. Buyers and sellers can make more informed decisions and achieve their homeownership goals by staying informed about these trends. Whether you’re a first-time home buyer or a seasoned seller, understanding generational trends can empower you to navigate the complexities of the real estate market confidently.