The demographic shift in the U.S. population is having a big impact in the real estate market and is redefining the typical home buyer in more ways than one. While there are other statistics to consider, the primary identifying factor stitching the patterns of home ownership together can be traced to generational differences amidst an improving economic outlook.
One of the notable hallmarks of the housing crisis was a dramatic increase in multi-generational households. Many young adults remained at home with their parents after graduating from college delaying the start of their own families and housing purchases. As a result, the population of first-time buyers has changed over the recent years with a notable increase in the median age and income at which adults are purchasing their first home.
Millennials Becoming Primary First Time Home Buyers
Now that there is more stability in the economy and the job outlook continues to improve, Millennials, those born between 1982 and 1999, are entering the housing market and becoming the primary buyers of residential real estate. “Millennials are the largest generation of people in the U.S. and represent 60 percent of first-time homebuyers,” said Jonathan Smoke, chief economist for realtor.com®. “They are also more likely than any other group to purchase a home in the next year.” Although tight mortgage restrictions and large down payment requirements have prevented many Millennials from owning a home, they currently represent approximately one-third of consumers in the real estate market. As the mortgage process improves they will most likely grow to be the largest group of home buyers within the next few years.
Baby Boomers Re-sizing
Over the next two decades, about 8,000 baby boomers per day will reach retirement age, according to the American Association of Retired Persons (AARP). As baby boomers reach the next stage of their lives many will be selling their primary residence, but not everyone will be downsizing as some may expect. In fact, nearly half of participants in a recent survey by the Demand Institute indicated they are actually in the market for a larger home.
Real estate agents and brokers who best adapt to demographic differences in their real estate marketing strategies and are able to meet the needs of a multiple generation of buyers and sellers will see incremental growth for the foreseeable future.