A nationwide survey evaluating generational differences of recent home buyers and sellers shows young home buyers are optimistic about the housing market and see their home as a good investment. Meanwhile, older buyers are more inclined to trade down to a smaller property due to their changing lifestyles.
Findings from the 2014 National Association of REALTORS® (NAR) Home Buyer and Seller Generational Trends study reveal eight out of 10 recent buyers considered their home purchase a good financial investment, ranging from 87 percent for Millennial buyers age 33 and younger, to 74 percent for Silent Generation buyers, age 68 and older.
"Given that Millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand," said Lawrence Yun, NAR's chief economist.
Yun noted Millennials continue to face tight credit, limited inventory, eroding affordability and high debt loads, which are big obstacles to owning a home. Twelve percent of all recent buyers had delayed their home purchase due to outstanding debt. Of the 20 percent of Millennial buyers who took longer to save for a down payment, 56 percent cited student loan debt as the biggest obstacle. Fifteen percent of Gen X buyers age 34 to 48 had delayed buying, with 35 percent citing student debt and 46 percent citing credit card debt.
The median age of Millennial home buyers was 29, their median income was $73,600 and they typically bought an 1,800-square foot home costing $180,000. The typical Gen X buyer was 40 years old, had a median income of $98,200, and purchased a 2,130-square foot home costing $250,000.
Although most purchases by all generations were in a suburban area, Millennials were more likely to buy in an urban or central city area, 19 percent. The Silent Generation was more likely to buy in a small town, 24 percent and more likely to purchase in senior-related housing, cited by 26 percent of older respondents.
Younger buyers placed higher importance on commuting costs, while older generations placed higher importance on energy efficiency, landscaping and community features. There is a clear trend of downsizing to smaller homes among the older generations.
Nearly nine out of 10 buyers financed their purchase, but those buying with all cash increased with age. Among the Silent Generation, 45 percent paid cash for their home. Similarly, for those who financed their purchase, the downpayment percentage increased with age, ranging from 5 percent for Millennial buyers to 23 percent for the Silent Generation.
All home buyers, regardless of age, typically began the home buying process online and then contacted a real estate agent. Millennials also looked online for information about the home buying process before contacting an agent.
Younger buyers relied on real estate agents to help them understand the buying process, while older buyers most appreciated real estate agents pointing out unnoticed features or faults with the property. Sellers of all ages typically found a real estate agent through a referral or friend, or used the same real estate broker or agent from a previous transaction. In choosing a real estate agent, the agent's honesty and trustworthiness was the most important factor for all ages.
"These surveys by the national and state REALTOR® associations are helpful because they give insight on needs of buyers and sellers, how they perceive the market, and what they expect from their agent. They also confirm despite initial online searches for property, that the agent continues to play a major role in the real estate transaction," said David Tonna, president of the Silicon Valley Association of REALTORS®.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.