Baby boomers edged out millennial home buyers, according to a new report, thanks to high mortgage rates and home prices.
According to an annual report by the National Association of Realtors, baby boomers make up 39% of home buyers, up from 29% last year. At the other end of the spectrum, Generation Z only makes up 4% of buyers.
Millennials, aged 24 to 42 had been the biggest group of buyers since 2014 nationally, the NAR said, but their share has fallen to 28% last year from 43% in 2021.
“‘The majority of them are repeat buyers who have housing equity to propel them into their dream home.’”
— Jessica Lautz, vice president of research at NAR, on baby boomers
“Baby boomers have the upper hand in the homebuying market,” Jessica Lautz, deputy chief economist and vice president of research at the NAR, said in a statement.
“The majority of them are repeat buyers who have housing equity to propel them into their dream home — be it a place to enjoy retirement or a home near friends and family,” she added. “They are living healthier and longer and making housing trades later in life.”
Childcare expenses was the biggest factor holding back buyers. Some 36% of all buyers said that this was the biggest obstacle. That was followed by healthcare costs and credit-card debt.
Paying off debt and having to save more for a down payment are two other major factors hurting potential buyers, experts say. The median amount buyers put down for a house was 14%, according to the NAR.
The NAR surveyed over 4,800 recent home buyers.
First-time buyers face challenges
The rise in mortgage rates and high home-price increases in the second half of 2022 have made home buying tough for many first-timers.
First-time buyers comprised 26% of all purchases, which is the lowest since the NAR began tracking the data. Last year, 34% of home buyers were first-timers.
Most first-time buyers were millennials: 70% of younger millennials aged 24 to 32 and 46% of older millennials aged 33 to 42 were first-time buyers.
Only 9% of boomers were first-time buyers, in contrast.
“‘Their desire for homeownership is strong, and many are relying on family support systems to help make their first real-estate purchase.’”
— Jessica Lautz, deputy chief economist and vice president of research at the NAR
Generation Z, the youngest of the lot aged 18 to 23, have caught up in the past year. Their share of home buying rose to 4% in 2022 from 2% in 2021.
“As the youngest generation of home buyers and sellers, it’s encouraging to see Gen Z entering the market,” Lautz said. “Their desire for homeownership is strong, and many are relying on family support systems to help make their first real-estate purchase.”
The NAR also broke out homebuyers by gender and marital status. Some 61% of recent buyers were married couples, the NAR said, while 17% were single females, 9% were single males, and 10% were unmarried couples.
“Millennials were the biggest group of buyers nationally since 2014, but their share fell to 28% last year from 43% in 2021.”
— National Association of Realtors
First-time buyers, meanwhile, fight to get on the property ladder. Meg, a 37-year-old social worker from Massachusetts, bought her first home as a single woman in December 2021 after months of looking.
Her mother’s passing in May of that year had resulted in an inheritance, which went towards her down payment.
“I’ve been saving for the down payment for a while,” she told MarketWatch in an interview. “But getting some money from the estate let me go to 20%, which made me a more competitive homebuyer.”
She also had around $100,000 forgiven in student loans as part of the Public Service Loan Forgiveness program. “That really changed my debt-to-income ratio,” she said. “That was probably the biggest thing that allowed me to be able to purchase.”
She found a two-bedroom house that was 5 minutes from her job, and put in a bid with an asking price of $330,000.
“It’s not one of the more desirable zip codes,” she said. “It wasn’t a super cheap price, but I could afford it.”
“Homeownership was always a long-term goal for me,” she added.