Knowledge is power. And if you’re planning to battle hordes of other buyers to get a home or put your own house on the market this year, it could pay off big-time to know your competition.
These new soon-to-be homeowners are more likely to be millennials, not have children, and make more money than in previous years, according to the National Association of Realtors® 2020 Home Buyers and Sellers Generational Trends Report. With home prices shooting to new heights, it’s not exactly a shocker that buyers need to be higher earners nowadays.
The report is based on a 125-question survey filled out by nearly 5,900 people who bought a home to live in between July 2018 and June 2019. Income data is from 2018.
Overall, today’s buyers are highly educated, with about 80% having at least an associate’s degree or additional schooling. That could explain why they’re doing so well financially—which is critical when buyers are dropping a median $257,000 nationally on properties. (That’s $7,000 more than last year.) Buyers had median household incomes of $93,200 in 2018. That’s a 1.7% rise from the previous year.
“We know that the housing market has been really competitive the last few years,” says realtor.com®’s chief economist, Danielle Hale. “To successfully compete for a home, higher incomes help.”
They’re also likely to be coupled off, increasing those household earnings. About 61% were married, while 9% were unmarried couples. Single women made up 17% of buyers, down just 1 percentage point from last year, while 9% were single men, unchanged from last year.
Home buyers were also overwhelmingly white, as Caucasians made up about 84% of those purchasing homes. Latino shoppers bought 7% of homes, Asians bought 5%, and blacks bought 4%.
Their main motivation was the desire to own their own residence. That was followed by wanting a larger property and to be closer to family and friends.
What we know about each generation of buyers and sellers
Millennials are still buying the most homes, purchasing about 38% of the properties on the market. The vast majority, 86%, were first-time buyers.
“That’s not surprising, given where they are agewise,” says Hale. “They’re hitting milestones like moving out on their own or moving in with a partner or settling down and having kids.”
One of their biggest roadblocks was student loan debt. Nearly half of younger millennials, aged 22 to 29, had student debt: a median $26,000 balance. Ouch. About 38% of older millennials, aged 30 to 39, had a median $34,000 left to pay off.
Younger millennials purchased homes with a median price tag of $206,300—while their slightly older counterparts dropped a bit more, $282,000.
Members of Generation X bought nearly a quarter of residences, at 23%. They’re also making the most money, with a median household income of $110,900 in 2018. And as they’re likely to have growing families, they bought the largest homes clocking in at about 2,000 square feet. Their homes cost a median $278,000—just slightly under what the boomers paid.
Boomers bought 33% of homes. They were also the most likely to splurge on costlier new construction. Younger boomers, aged 55 to 64, spent a median $250,500 on their homes, while older boomers, aged 65 to 73, spent a bit more at $255,900.
The types of homes buyers want these days
The vast majority of buyers opted for the classic American dream: a detached, single-family home. These abodes, which typically come with back and front yards, made up about 83% of sales.
Just 6% of folks got townhouses, 4% chose duplexes or condos in buildings with two to four units, and 1% purchased condos in large buildings with five or more units.
Half of folks headed to the suburbs, with 22% becoming homeowners in small towns. Just 13% bought homes in cities—the same percentage who chose to live in rural areas.
“They’re looking outside of the cities to the suburbs and small towns where homes are more affordable,” says Brandi Snowden, NAR’s director of survey research. “People are purchasing more previously owned [homes], they’re looking for a better price and better value, especially among younger millennials.”
Most folks chose smaller, three-bedroom, two-bathroom residences with a median 1,850 square feet. That’s a little less space than last year, when buyers purchased homes at about 1,900 square feet.
Buyers overwhelmingly opted for cheaper, existing homes rather than newly built abodes. Just 13% of folks closed on new homes versus 87% of buyers who settled into a previously lived-in residence. The average home was built in 1990.
Meet today’s home sellers
Today’s sellers are likely to be either members of Generation X or older baby boomers likely moving into their forever or retirement homes. And with a nationwide housing shortage worsening by the minute, they’re typically able to get 99% of their final asking price. However, about 4 in 10 of them did have to lower their list price at least once. So buyers can take heart!
Sellers also made a nice profit, netting a median $60,000 more than they originally paid for their properties.
“With the lack of supply, any homes that are coming to the market are being picked up very fast,” says Snowden.
About 70% of sellers were moving within the same state. Their most common reason for moving was to be closer to friends and family, needing a larger residence, or being transferred to a job somewhere else.
McDevitt Real Estate Closing Attorney Services - Real Estate Law Massachusetts
Have a question about Real Estate Law or need a closing attorney? Fill out the form below or call us at 617-282-7550.
We are conveniently located in Hingham and Milton, Massachusetts.
McDevitt Law Group strives to provide the highest quality real estate law and estate planning services, and we have for almost 40 years. As a small law firm, we pride ourselves on providing personal attention to your case and providing the highest quality representation. Call us today, or use the contact form below.
Barnstable County | Bristol County | Duke County | Essex County | Middlesex County | Nantucket County | Norfolk County | Plymouth County | Suffolk County
Just click on the Phone Number to dial on your phone: