‘We were getting crushed’: Millennials reclaim the title of biggest home-buying generation, but boomers still have an upper hand

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Walter Medina, 31, found himself demoralized when he tried to buy his first home.

Medina and his wife began looking for homes in suburban Maryland in January, keen on landing something quick because their apartment lease was ending soon. Their budget was between $400,000 and $425,000, and the couple planned to put down 3% of the home’s purchase price.

High mortgage rates didn’t spook Medina, even if they meant taking on a 30-year loan at a 6.8% interest rate. The process of actually finding a house and signing the contract, he said, was the painful part.

After attending around 15 open houses, the couple put down five offers, all of which fell through. “I just remember the first one. It felt like we were getting crushed,” Medina said. The home was listed at $395,000, so the couple offered $405,000. The buyer ended up going with an all-cash offer of $400,000 that came with no contingencies. 

Bid after bid, buyers with deeper pockets kept beating out Medina and his wife. “There was one where they went [$40,000] over asking,” Medina recalled. “It was extremely competitive.” 

Over a third of home purchases in February were made with all cash, according to a Redfin analysis. “In many places, wealthy Americans are the only ones who can afford to buy homes,” said Chen Zhao, the brokerage’s economics research lead.

But the couple’s efforts eventually paid off with their sixth bid, and they closed on their home March 5.

Medina’s experience illustrates how competitive and expensive the U.S. housing market has become for first-time home buyers, particularly millennials.

It’s also a tale of perseverance and success. Millennials, the largest generation in the U.S., are the country’s dominant home buyers today, according to the National Association of Realtors’ latest annual report on generational trends in home buyers and sellers. And their demand for homes to buy is likely to only intensify in the years to come, based on industry forecasts and analyses of demographic trends. 

Millennials reclaim the home-buying title after brief boomer takeover

To be sure, older generations still have the upper hand in the housing market.

“Sellers have lived in their homes for a long period of time, and they’ve gained a lot of housing equity,” Jessica Lautz, the deputy chief economist and vice president of research at the National Association of Realtors, told MarketWatch. So when they’re buying homes, they can pull out all the stops and pay for a home with cash. 

“But millennials found a way to enter into the market,” Lautz added.

After a brief period last year when millennials lost the title of the dominant home-buying generation to baby boomers, they have taken back the title, the new NAR report found. Millennials made up 38% of home buyers, the largest group by generation, followed by boomers at 31% and Gen X at 24%. 

First-time buyers made up 32% of all home buyers, the NAR said. Younger millennials in particular made “huge strides in becoming a first-time home buyer,” Lautz said; about 17% of home buyers were younger millennials. 

In fact, the 2023 surge by boomers was a blip, as millennials have made steady gains in homeownership and have outpaced their elders every year since 2014, aside from last year, Lautz said.

But with boomers seeing a sharp increase in home values and equity, they remain a formidable home-buying force. Over the next few years, there will be a tug-of-war between the two largest generations as to which will dominate the market, Lautz said. 

Gen Z women make homeownership gains

At the other end of the spectrum, the youngest generation of home buyers — who generally have less wealth given their age — are making strong progress towards homeownership. Even though Gen Z made up the smallest share of home buyers, at 3%, women of that generation have made significant headway toward homeownership, NAR’s data showed.

Overall, 20% of recent home buyers were single women, and Gen Z made up the highest share of single women buyers, the NAR said, at 31%.

Jasmine Wells, a 24-year-old active-duty servicemember, was one of those new, single homeowners. 

After learning in January 2022 that she would be stationed in South Carolina, Wells bought her first home there. She decided to buy after seeing how much cheaper it was to own rather than rent.

1st Lt. Jasmine Wells, who is in the Army, in front of her first home.

Photo courtesy of Jasmine Wells

“When I was looking at apartments, I saw that to get an apartment in a nice area, it was something like $1,800 a month,” Wells told MarketWatch in an interview. “I felt that it was like a really good idea for me to purchase a home.” 

She found from her supervisor that there was a company that works with people in the Army, like her. The company then assigned her a specific real-estate agent during the house-hunting process, but that arrangement wasn’t working for her: The offers she submitted were falling through. She found her own agent and they looked at more homes, including newly constructed ones. 

In May 2022, she found her target, and two months later, she closed on the newly built home for $300,000 with a mortgage backed by the Department of Veterans Affairs. She has a mortgage rate of 4.5%.

“My goal was to create generational wealth,” Wells said. “My mom talked to me a lot about how long she waited to purchase a home … and she completely regretted not purchasing it sooner to build generational wealth.” 

Boomers still rule home-selling

When it comes to selling homes, there’s no doubt about it — baby boomers are the dominant generation. 

Younger baby boomers in particular made up the largest share of home sellers, at 26%, NAR said. The median seller was 64 and earned a median income of $103,000. 

Gen X made up the second-largest share of sellers, at 23%. 

The most common reason homeowners cited for selling their house was to move closer to family and friends, according to the NAR. Other reasons included their home being too small and their family situation changing.

The typical homeowner lived in their house for 10 years before selling. That number has stayed the same over the past few years, but before the Great Recession, people used to move every six or seven years on average, Lautz said.

Tenure also varied widely by age group: Younger millennials typically stayed in their homes for four years, while sellers ages 59 and older stayed for 15 years.

One possible explanation for people staying in their homes for longer after the recession is that they “may think of their house in a different type of way,” Lautz said. People find staying in one place for a longer period of time to afford stability, and also allow them to build more equity in their home.

“But they may also have a lower interest rate, or [may] have purchased a larger home,” she added, “so this gives them some stability that they don’t have to make a housing trade.”

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