NAR Generational Trends Report shows millennials make up 43% of homebuyers

 by Emily Mack, abridged by RE/MAX Ultimate Professionals

What does the current generation of homebuyers and sellers look like? How old are they and how are they doing business? The National Association of REALTORS® (NAR) has answers with its 2022 Home Buyers and Sellers Generational Trends Report, released today.

The report provides insights with a by-the-numbers look at evolving demographics and was compiled based on a detailed survey of 5,795 recent homebuyers who purchased in the period between July 2020 and June 2021.

Who is looking for homes?

Millennials — 32 to 41 years old — continue to make up the greatest share of homebuyers, according to the NAR report, keeping in trend with the yearly results since 2014. During the period of study, millennials represented 43% of the market, with older millennials making up 25% and younger millennials, 18%. Most were first-time buyers: 81%. Younger millennials were the most educated age group purchasing homes, with 90% holding an associate degree or higher.

Jessica Lautz, NAR’s vice president of demographics and behavioral insights, said in a press release, “While young buyers use new tech tools, they also use real estate agents at higher rates than other buyers to help find the right home and negotiate the terms of the transaction.”

Those aged 42 to 56, otherwise known as Gen Xers, closely trailed older millennials, representing 22% of recent buyers. This group also earned the highest median income — $125,000 in 2020. Gen Xers purchased the most expensive houses with a median home price of $320,000.

Younger baby boomers, aged 57 to 66, accounted for 17% of recent buyers while older baby boomers, aged 67 to 75, made up 12%. Both subsections of baby boomers were the most likely to purchase outside of cities in smaller towns.

Other characteristics were also dominant across the different age groups. Sixty percent of buyers were married couples. Nineteen percent were single females. Nine percent were single males or another 9% were unmarried couples, the majority of those being millennial couples (21%).

“Many factors can contribute to the decision to buy or sell a home,” Lautz said. “For all home buyers under the age of 57, the main driver was the desire to own a home of their own. Among those 57 and older, the desire to be closer to friends and family was the top reason, followed by the desire for a smaller home.”

How are they shopping?

No matter the buyer’s age, the internet was the most common tool used in the home search. Looking online for properties marked the initial step for most. 

When asked to rank different real estate website features, most respondents named photos as well as detailed information about the property as “very useful.”

In addition to those various web efforts, 87% of all buyers purchased their home through an agent, with younger millennials using agents at the highest rate (92%). Young millennials, along with the silent generation, also wanted their agents’ help on paperwork in addition to helping them find the right home.

Seventy-three percent of buyers interviewed just one agent during their home search and those agents were chosen based on their apparent honesty and trustworthiness. Those traits ranked above experience on the survey.

What are they buying?

Detached single-family homes were the most common type purchased, making up 82% of all homes sales. Those purchasing new homes made up just 15% of the total share with the majority.

The typical home purchased was 1,900 square feet, with three bedrooms and two bathrooms. Older millennials chose larger homes, typically at 2,400 square feet, while the silent generation chose the smallest homes with a median square footage of 1,800.

Who is selling their homes?

Overall, the most common reason for selling was the desire to move closer to friends and family, followed closely by the desire for a larger home.

Ninety percent of all homesellers worked with a real estate agent to sell their homes. Above all, sellers wanted an agent’s help to price their home competitively and to market their home. In these instances, the reputation of an agent outweighed their perceived honest and trustworthiness — 32% of all sellers chose based on reputation.

Twenty-five percent of all sellers reduced their asking price at least once, with the silent generation the most likely to do so. This stood as another stark contrast to younger millennials who were the least likely to do so. Similarly, 26% of all sellers also offered incentives to attract buyers with the likelihood highest among young millennials and lowest among the silent generation.

Eventually, the homes sold went for a median of $85,000 more than what sellers originally purchased them for. Younger millennial sellers, who held on to their homes for the shortest amount of time, gained the least in equity (a median of $44,500), again in direct comparison to the silent generation who earned a median of $151,500 in equity.

In all, 70% of sellers consider themselves “very satisfied” with the process: less satisfied than recent buyers, but up from last year’s report.