Homeownership Trends by Generation

Photo of new houses from street view

The U.S. housing market has become increasingly competitive as inventory continues to decline. According to a recent housing trending report from Realtor.com, there has been a drop of almost 98,000 listings in the last year.1 Low interest rates have driven up demand at a time when the volume of new listings has slowed. Some of the inventory issues can be linked to key trends within two of the larger generations – Baby Boomers and Millennials.

Baby Boomers are retiring much later than previous generations and are remaining in their homes. Currently, homeowners over the age of 55 own 53% of all owner-occupied houses in the US. As they transition to retirement, many Boomers are modifying existing homes rather than moving to smaller houses or condos.

While Millennials continue to dominate the renters’ market, there are clear signs that they are beginning to buy homes. Today, the average age of a first-time home-buyer is 32. According to the Census Bureau, the homeownership rate among those under the age of 35 has jumped to almost 37%. In 2018, Millennials took on 45% of all new mortgages. In the last decade, the percent of Millennial homebuyers who prefer a new home increased from 28% to 41%.2

Analysts suggest that Boomers will ultimately downsize within the next 10-15 years. While this may help the housing inventory, there are questions whether the conflicting desires of the generations may cause a continuing housing squeeze. Where Baby Boomers preferred McMansions in outlying suburbs, Millennials, who often have less purchasing power, prefer smaller homes closer to urban areas. Some researchers see a real opportunity for developers to transition suburbia to a more walkable, urban-like setting to draw more Millennials.

Boomers Millennials
Bought their first home between ages of 25 and 34 45% 37%
% of new mortgages 17% 45%
Median Purchase Price $289K $238K
Prefer a newly built home 29% 41%

Source: Industry trade press

1 US Housing Inventory Tightens as Competition Heats Up, October 31, 2019, Realtor.com
2 Millennials Show a Growing Preference for New Homes, August 20, 2019, National Association of Home Builders

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