The Housing Chronicles Blog: Generational Shifts in Home Buying: A 2015 NAR Report Reveals Interesting Insights

Tuesday, October 27, 2015

Generational Shifts in Home Buying: A 2015 NAR Report Reveals Interesting Insights

Recently, the National Association of Realtors® released their 2015 Home Buyer and Seller Generational Trends report, which analyses the differences between recent home buyers and sellers of various age groups. The report is chock full of interesting insights, such as the continued importance of partnering up with a real estate agent for younger buyers even after having done considerable research online.

Moreover, as the housing market continues to emerge from the Great Recession, one trend has been made abundantly clear:  Despite the considerable headwinds facing Generation Y as they came of age often saddled with student debts, car loans, stagnant wages and tighter mortgage standards, they have continued to persevere, and in 2015 accounted for the nearly one-third of home buyers.

At the same time, Baby Boomers accounted for almost as many sales (split among 16 percent younger Boomers and 15 percent older Boomers), while Generation Xers followed behind at 27 percent.  The Silent Generation accounted for just 10 percent of recent sales activity.

Lawrence Yun, NAR’s chief economist, believes that the survey once again underscores the still-untapped demand for owning homes among young adults, reporting that over 80 percent of both Gen X and Gen Y buyers view their home purchase as solid investment.  As opposed to renting in today’s market -- in which tenants can expect to see annual increases of three to five percent -- they’re counting on the predictable, fixed payments made available by a traditional mortgage.

Of course selling to these different generations also requires a more customized approach than we might have seen in years past, in which the same traditional sales office, model home complex, well-crafted brochure and robust Web site could market just as effectively to distinct age groups.

For example, although 65 percent of married couples buy today’s homes (with another 8 percent of unmarried couples making the plunge), single women are almost as twice as likely to buy a home than their male counterparts.  However, given that 65 percent of all buyers do not have children, forcing them to choose among resale homes in suburbs originally designed mostly for families can often be a marketing challenge.

In addition, the rising importance of multi-generational homes -- accounting for 13 percent of recent sales -- has seemingly risen in lockstep with a higher share of foreign-born buyers, especially to middle-aged heads of households born in the 1970s.  However, given that 70 percent of buyers continue to choose suburban locations, it seems that many want to leave their options open, whether that means future children, a grown child moving back into the home, or aging parents and in-laws who may need additional supervision from family members.

Today’s buyers also rely much more on the Internet to conduct their own research, ranging from about one-third for older buyers to just over half for those under age 35.  What this means is that by the time a potential buyer visits an open house or a model complex, they’re probably not looking for information they already know -- they’re seeing if the photos and marketing verbiage matches the reality of seeing it in person, as well as how knowledgeable and trustworthy the sales agent seems.

Moreover, given that more than half of both Generation X and Y buyers started their home search on smartphone devices (with about 25 percent ultimately finding that new home in the same way), it is critical for builders and agents to optimize their Web sites for mobile users.

For younger buyers under age 35, they bring their own unique wish list, such as a premium on convenience to their jobs, a desire to avoid renovation headaches (which bodes well for newer homes if they can afford it) and a need for low down payments.   Yet because of that affordability issue, it’s often those same younger buyers opting more for older homes out of necessity.

For older buyers such as Baby Boomers, when they move it’s often to a smaller home, even if they’re not ready for retirement, and if they’re looking for a freer lifestyle with less home maintenance, new homes with community amenities continue to be quite popular, especially if they plan to stay there for 15 to 20 years.

Finally -- and not surprisingly -- the older the buyer, the less they’re willing to compromise in terms of price, size and condition of the home.  And who can blame them?  After a lifetime of catering to family needs and wants, a low-maintenance home with a view seems like a pretty nice reward for a life well lived.

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