Generational Homeownership Trends

By Lisa Fant

A highlight on the National Association of Realtors? Home Buyers and Sellers Generational Trends and Wealth Gains by Income and Racial/Ethnic Group reports

Research consistently emphasizes the housing sector’s importance to the economy and the social and financial advantages for individual homeowners. The National Association of Realtors? Home Buyers and Sellers Generational Trends and Wealth Gains by Income and Racial/Ethnic Group annual reports aim to shed light on generational trends among home buyers and sellers, as well as the dynamics of wealth accumulation through homeownership, offering valuable insights into the similarities and inequalities across different demographic groups.

As real estate professionals, it’s essential to acknowledge the diverse needs, opportunities, and challenges of potential homebuyers and sellers. Recognizing the preferences and obstacles different groups face helps us foster a more inclusive and equitable approach to homeownership.

First-Time Buyer Rate Dips

First-time buyers accounted for 26% of all home buyers, marking a decrease from 34% last year, according to NAR’s 2023 Home Buyers and Sellers Generational Trends Report. Among younger millennials aged 24-32, 70% were first-time buyers, while 46% of older millennials aged 33-42 also purchased their first homes. In the Gen X category, 21% of individuals aged 43 to 57 were first-time home buyers.

While both first-time and repeat home buyers share the common goal of acquiring a property, their distinct experiences, financial situations, objectives, market knowledge, and emotional factors contribute to their unique perspectives and requirements throughout the homebuying process.

Along with an uptick in mortgage rates through late October 2023, first-time home buyers also often face limitations in funds for a down payment and may need assistance in securing financing. Unlike repeat buyers, they may not have accumulated significant equity from a prior home sale or may encounter more anxiety and uncertainty during the homebuying process. The decision to purchase a home is a substantial financial commitment, and first-time buyers may feel heightened pressure in a competitive market.

Baby Boomers Make Up Largest Buyer and Seller Generation

Baby boomers, encompassing both younger boomers aged 58 to 67 and older boomers aged 68 to 76, comprised the largest generation of home buyers, accounting for 39%. As a collective group, baby boomers also represented the majority of home sellers at 52%. Their reasons for selling varied, with some opting to move closer to friends and family, while others were motivated by the need to downsize from a larger home. 18% of older boomers purchased a multi-generational home to spend time and take care of aging parents, or due to children over the age of 18 moving back home for cost savings. Younger boomers have owned their homes typically for 11 years before selling, while older boomers owned their homes for 16 years before selling.

Among all generations of home buyers, the first step taken in the home search process was to look online for properties; however, younger boomers contacted a real estate agent as a first step more often than other generations.

Gen X Remains Highest-Earning and Most Diverse Buying Group

Generation X buyers aged 43 to 57 made up 24% of recent home buyers. This group remains the highest-earning home buyer group, with a median income of $114,300 in 2022. Gen X buyers were the second most likely to purchase a multi-generational home at 17%. When looking at the reason to purchase a home, they were more likely, in comparison to other ages, to purchase for the desire to be closer to a job, school, or transit, or for a job relocation or move.

This group also remains the most racially and ethnically diverse population of homebuyers, with 23% identifying as a race other than white/Caucasian. Even so, data shows significantly fewer low-income households and households of color own their home and can build wealth compared to other income and racial/ethnic groups, according to NAR’s 2023 Wealth Gains by Income and Racial/Ethnic Group Report.

Buyer Debts Delay Home Purchases

Similar to years past, buyers continue to finance their home purchases, with 78% of homebuyers choosing to do so. This percentage tends to decrease as the age of the buyer increases. Younger buyers continue to depend on savings for their down payment, while older buyers tend to use funds from a previous home sale. Overall, buyers were delayed primarily by student loan debt and high rental costs holding back savings. 35% of younger millennials reported having student loan debt with a median loan balance of $30,000, compared to 30% of older millennials with a median balance of $40,000. Only 3% of older boomers had student loan debt with a median balance of $9,000, either from personal educational loans or accumulated debt from their children’s educational loans.