A growing share of home buyers are millennials, and more of them are purchasing single-family homes in the suburbs. Also, although student loan debt is more prevalent among millennial buyers, they aren't the generation with the largest student debt balances.
According to the 2016 National Association of REALTORS® (NAR) Home Buyer and Seller Generational Trends study, the millennial generation's desire to own a home of their own as the primary reason for their purchase is increasing, up to 48 percent compared with 39 percent a year ago. The survey also found the share of millennials buying in an urban or central city area dropped to 17 percent from 21 percent a year ago and fewer of them (10 percent) purchased a multifamily home compared to a year ago (15 percent). Overall, the majority of buyers in all generations continue to purchase a single-family home in a suburban area, and the younger the buyer, the older the home they purchased.
While millennials may choose to live in an urban area as renters, the survey reveals that most aren't staying once they're ready to buy. "The median age of a millennial homebuyer is 30 years old, which typically is the time in life where one settles down to marry and raise a family," said Lawrence Yun, NAR's chief economist. "Even if an urban setting is where they'd like to buy their first home, the need for more space at an affordable price is for the most part pushing their search further out."
For the third straight year, the largest group of recent buyers were millennials, who composed 35 percent of all buyers. Generation X were 26 percent of buyers, and the Silent Generation made up 9 percent.
For all buyers, debt delayed saving for a down payment by a median of four years. Millennials were most likely to cite student debt (53 percent) as the debt that delayed saving, while credit card debt was indicated by Gen X (44 percent) and younger boomers (36 percent).
Yun said student debt is likely impacting more than just the millennial generation's ability to buy a home. "Whether it's from financing their own education or borrowed for their children, it's somewhat surprising to see a higher median amount of student debt among Gen X ($28,000) and younger boomer buyers ($29,100) compared to millennials ($25,000)," said Yun.
Nearly all buyers predominantly used the Internet and a real estate agent during the home search process. Eight percent of millennials and Gen X buyers used an agent and were also the most likely to use mobile or tablet applications during their search.
"Your REALTOR® can assist you by providing information about each property which the Internet can't get. Your REALTOR® can help you negotiate, understand different financing options, and make sure everything flows together smoothly," said Karen Trolan, 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.