Stay in Mom’s Basement? Nope! Millennials Were 2014’s Top Home Buyers, Says NAR
If you’ve ever read anything about millennials, you’d be forgiven for thinking they’re shiftless, underemployed ne’er-do-wells with no intention of ever moving out of their parents’ basements. But the truth is millennials are home buyers. In fact, they made up the largest percentage of home buyers in 2014.
Millennials—that is, adults 34 and younger—accounted for 32% of all home purchases last year, according to the 2015 National Association of Realtors® Home Buyer and Seller Generational Trends study. In fact, the median age of a millennial home buyer was 29, with a median income of $76,900. What’s more, millennials were most likely to buy with their unmarried partner.
What’s driving all the home buying? Life. Many young people are employed and having babies. Therefore, they need space. Also, with rising rent, buying a home and locking in a fixed payment for the next 30 years makes good financial sense, to those who can afford to buy. According to the report, millennials, like the majority of buyers, purchased a single-family home in the suburbs. They are nesting.
Even after witnessing the recession, seeing their parents lose their homes, and suffering the indignity of low unemployment rates, millennials are coming out on top. Those who were employed saved their money and were able to use Federal Housing Administration low-down-payment loans to gain a foothold. Still, a full quarter of young buyers depended on their parents for down payment assistance, according to the report, compared to 15% for Generation X, those aged 35 to 49.
Millennials entering the housing market is a good thing for both the economy and neighborhood stability, but the share of first-time buyers is still at its lowest level since 1987, according to NAR.
“The return of first-time buyers to normal levels will eventually take place in upcoming years as those living with their parents are likely to form households of their own, first as renters and then eventually as homeowners,” said Lawrence Yun, NAR’s chief economist.
For those who can’t qualify on their own, a new trend has emerged—multigenerational housing. According to the report, 13% of all home purchases were by multigenerational buyers: siblings purchasing together, parents purchasing with children. The impetus here is saving money. Many younger baby boomers saw their adult children move back home (23% of those surveyed). To make the situation bearable, purchasing a home that could accommodate this living situation formed a new post-housing-crisis demographic.
To conduct the survey, NAR mailed a 127-question survey to randomly chosen home buyers across the country. A total of 6,572 responses were received. The home buyers had to have purchased a home between July 2013 and June 2014.