The National Association of Realtors® (NAR) states that Baby Boomers are buying more homes than millennials in 2022 and 2023. This development has a major impact as it portrays the demographic of who is leading the housing market and purchasing properties.
More precisely, through this two-year period, Baby Boomer homebuyers had an increased portion of total real estate deals compared to millennial buyers who saw their portion reducing. The causes are high home prices and mortgage rates, affordability problems, lack of inventory, and even personal lifestyle choices. In our blog post we will look into why such change took place plus what effects could arise on the forthcoming stages of the housing sector progress.
Analyzing the 2022-2023 Housing Market Data
Baby boomers were a big player in the housing market between 2022 and 2023, buying more homes than Millennials. We won't have 2023 figures until later, but in 2022 boomers made 39% of home purchases while millennials made 28%. Compare that to 2021 when millennials took the lead with a 43% share compared to baby boomer's 28%.
Millennials, on the other hand, opted for newly built homes due to higher salaries and lower interest rates. It appears that location was an important factor too as baby boomers chose suburban areas with single-family dwellings while millennials trended towards urban environments characterized by condominiums or townhouses.
Additionally, it looks like millennial preferences might have changed a bit over time which can explain their smaller presence in the market compared to baby boomers' larger share. The data showed us that millennials usually take longer than Baby Boomers when deciding to buy a property; this could mean they're waiting until they find exactly what they want instead of going through each option quickly if not happy about them - something Baby Boomers tend to do very often.
Understanding Factors Driving Baby Boomer Home Purchases
Recent data shows that people born between 1946 and 1964 purchased more residential properties in 2022 and 2023 than any other generation. To get a better grasp of why this is happening, potential buyers must understand how different markets will evolve so they can plan their own purchases accordingly.
One major force propelling Baby Boomer purchase decisions happens to be financial stability - something many have achieved through hard work over multiple decades of service or success in investments. This allows them to invest confidently with greater resources which gives them an edge when it comes to buying property compared to younger generations who may not yet possess such economic security.
Many members of this group are retired or getting close to retirement, giving them an opportunity to use the money they saved up for a more reliable real estate purchase now that their job incomes aren't dependable. What's more, due to longer life expectancies and reduced costs associated with bringing up children, many boomers have been able to hold onto bigger amounts of cash. On top of that, when compared to millennials on average boomers tend towards being risk-averse while planning out finances which makes them wary about gambling away investments while buying homes.
Retired boomers might not have as much current income as successful millennials, but they have most likely added to their income over the years by starting out small and moving up. The equity built from owning a home vs. renting has helped boomers continue to up the value of their next home. On the other side, many boomers are downsizing, allowing many of them to pay cash during the hectic Seller's Market that was seen.
Baby Boomers are heavily invested in purchasing homes due to free time offered by retirement. This provides unprecedented freedom for leisure activities and being closer to family, with a focus on golfing, fishing or simply visiting grandkids or distant relatives living nearby. For those still working full-time jobs, these purchases can act as a safe haven where they can enjoy life after finally deciding to retire from work.
Baby Boomers may prefer to look for properties that don't require too much maintenance since their time isn’t as abundant as it used to be. They're likely after homes with minimal landscaping or updates needed, so they can spend more of their time enjoying leisure activities. Basically, these days Baby Boomer homeowners want something low-maintenance; a home where tedious upkeep does not take away from the free moments in daily life.
With that said, many millennials don't want property upkeep because of stressful jobs with long hours. Many of them might decide to continue renting instead of buying real estate and worrying about yard upkeep and general home maintenance. Not everyone wants to live in an attached property like a condominium or townhouse with shared walls. They might be living in an apartment now and will only consider moving if they can afford a single-family home.
Given that many in the Baby Boomer generation already have well-established careers and grown families, they may not be looking for a large home. Instead, they might opt for something more manageable yet comfortable enough to host visitors like their grandkids or friends coming from out of town. Fundamentally, what drives them when it comes to house buying is an amalgamation between practicality - such as financial stability - and lifestyle preferences which often include leisure activities or family closeness options. Being aware of these elements could help those aiming to become homeowners soon come up with suitable plans on how to purchase a house effectively in the near future.
Comparing Baby Boomers and Millennial Buyers
Even though these two sets of buyers come from different generations they still have a major influence on the housing market. In both 2022 and 2023, Baby Boomers purchased more homes than Millennials making them the leading demographic among house purchasers during this period. It is an open secret that Millennials are tech-smart compared to their predecessors; however, due to student debt along with low salaries they find themselves unable to become financially stable - a fact that frustrates many young adults as it limits not only access to homeownership but also other life opportunities. Is college really worth so much money if you can't afford to live after graduation?
It's no wonder Baby Boomers have been able to get ahead of Millennials in terms of buying homes. Usually, they are more well-off due to their higher wages and capacity for saving towards large purchases like houses. Also, having gone through a time period of major economic growth has enabled them to tap into many resources when it comes down to covering the cost of a new house. Yet even though they may be financially better off than most younger generations – when it comes to technology know-how or keeping up with current real estate trends - baby boomers can still lag behind!
For most Millennials, doing business online is the preferred method. On the other hand, Baby Boomers still rely on using tried and true methods such as interacting with real estate agents in person or visiting open houses. This puts them at a disadvantage because they don't know how to make use of tech trends like virtual tours and digital mortgage documents that can give their younger counterparts an edge when looking for their perfect home. So it's pretty clear that there is a large generational difference between Millennials and Baby Boomers which has had considerable influence over recent housing markets; while older generations may have more financial stability, Millennials are becoming competitive through leveraging modern technology within this realm. However, I am seeing more and more Baby Boomers that know how to use computers and search the Internet, so I'm not sure if this a truly accurate.
Economic Impact of Baby Boomers as Dominant Homebuyers
Baby Boomers, those born between 1946 and 1964, have had an undeniable influence on the US housing market. Home purchases by baby boomers were consistently higher than home purchases by millennials in the years 2022 and 2023 - this was likely due to a variety of factors that made it easier for them as they reached retirement age. In particular, one factor stood out: their increased economic power. This generation's purchasing capacity gave them more options when looking at homes fitting their needs which allowed them to make informed decisions based on what best matched their lifestyle requirements.
Baby Boomers have earned more than any other generation since they joined the workforce and had a better chance of accumulating wealth earlier in life compared to older generations. When baby boomers reached retirement age, they were able to afford bigger investments in their homes or manage higher mortgage payments. Low interest rates also meant that this generation was at an advantage when it came to buying homes as opposed to younger people who'd just started out with their careers.
Plus, the increased longevity of Baby Boomers added another component - something we rarely think about but is absolutely essential for financial stability! All these factors together helped them get further ahead financially speaking than previous generations ever did – raising legitimate questions such as how can future retirees compete?
Baby Boomer retirees can look forward to living up to 10-15 years more than their parents, which gives them the opportunity for an extended period of time to enjoy their desired house after retirement. This has resulted in numerous baby boomers deciding on elegant houses situated in sought-after places or investing in a secondary home with stunning views of water and plenty of outdoor activities perfect for a relaxed lifestyle.
Moreover, job security also had a huge influence over Baby Boomers having the capacity to purchase top-of-the range properties throughout this era; many already had flashing career paths at an early age while sustaining stable jobs during adulthood that left them with secure finances once they reached pension age when buying a property from dreams. The combination between financial resources and a long lifespan granted these people the assurance necessary to invest across multiple homes within 2022 -2023 whereas millennials were still battling through a chaotic labor market caused by COVID-19 limitations plus lockdowns.
Exploring Housing Preferences of Baby Boomers
The Baby Boomers' spending power still has a major impact on real estate markets today. Despite millennials making more money and taking out bigger mortgages, the Boomer generation is now actually responsible for buying up more homes than their younger counterparts.
It's difficult to fully comprehend the housing preferences of this demographic as everyone's tastes are different. Some prefer staying put, either due to feeling comfy with what they know or wanting to stay close to those who matter most - family members and buddies alike!
Many Baby Boomers are considering an upgrade from their current home, whether that means getting a better view or more space for those living in urban areas. It really boils down to what resources and goals they have – do they want the comfort of staying put or would trading up be something they'd enjoy?
Those with enough money may find taking on greater luxuries like wine cellars, outdoor kitchens, dedicated guest rooms, etc appealing; however, some might decide that due to financial constraints, it's best to stay where you're at or to downsize into a smaller home. Ultimately though no matter which route is taken by people belonging to this generation, it has become evident how influential Boomers continue being when affecting the real estate market - not just through buying new houses but also doing renovations as well as looking into desirable communities for downsizing during retirement period.
I had seen some of my parent's friends purchase the house of their dreams when they retired. They were now empty nesters but bought larger homes with more bedrooms and bathrooms. When we first purchased a Scottsdale townhouse as a 2nd home while still living in Illinois, we became friends with a couple of our neighbors.
One of our neighbors told us how she and her husband bought a large house in Scottsdale when they moved from a different state. They figured their friends and relatives would visit them. But that didn't happen, and they were living in the largest home they ever had. They ended up selling it and downsized.
When we moved to Arizona full-time we ended up buying a home that was similar in size to our prior place. We do have a lot of visitors with our family and friends so it has worked out for us so far. Although I do think of downsizing at some point, we also love our location and floor plan. So we just might keep this house for quite some time.
Why Millennials Are Lagging in Home Purchases
Recently, there has been a peculiar trend; millennials have not kept up with the rate of home buying compared to past years. Of course, this may be due to the high cost of housing across parts of America, however, it is worth exploring what causes this gap between generational trends in more depth.
The main reasons for Millennials possessing fewer homes could lie within an array of factors. Firstly and most evidently is the increase in day-to-day living expenses which can be found greatly increased in multiple cities and states throughout our country.
As wages fail to keep up with inflation, and the cost of housing skyrockets, it can be tough for a lot of people to save up enough money for a down payment on their dream house - particularly if they have student loans or are struggling financially in general. But money isn't always the main issue when it comes to buying property; Millennials' priorities differ from those of earlier generations when looking at homeownership. A lot of Millennials would much rather invest cash into experiences that will make them happy over time than put all their funds toward purchasing real estate – how do you measure memories?
Renting over buying has its perks - it's more flexible and convenient. That said, Millennials are coming of age during a period marked by great economic turmoil and political instability which only further drives their hesitation towards investing in such a large purchase like real estate. Many choose to make smaller investments with lower risks involved instead since they don't have the financial stability that previous generations were accustomed to or access to necessary funds for down payments on houses anyway! As opposed to jumping straight into conclusions about why Baby Boomers purchased more homes than Millennials did in 2022 & 2023, there may be many reasons behind this statistic; from seeking other investment opportunities, priorities changing between generations, etc.
Projected Future Trends in the Housing Market
The housing market has been seeing unprecedented change in the past couple of years, and it's hard to predict what trends will be like going forward. In the previous decade, lots of shifts have taken place when looking at who was buying homes - for 2022 and 2023 baby boomers made up a bigger proportion than millennials. Some industry experts are saying this trend could continue due to fewer young people tapping into the world of homeownership for many reasons. On top of that, we're also witnessing an increase in renters rather than buyers – has owning property lost its appeal?
The cost of living has been steadily increasing which is causing more younger generations to prefer urban living. At the same time, many people are taking a closer look at what's available outside major cities since there's usually plenty of space and cheaper prices than renting in a city. Renting has become increasingly popular because it just makes sense - why buy when you can rent for longer or even indefinitely?
Moreover, this trend could also be seen with single-family homes being replaced by large attached property complexes that are prevalent in the new construction Scottsdale real estate market (usually offering luxury living with shopping, dining, entertainment, and workout areas including walking paths) and multi-family dwellings that tenants use as residences instead. This transition seems inevitable given current conditions but only time will tell how much influence these changes truly have on housing markets across the US.
As cities become increasingly congested, real estate professionals anticipate that the trend will continue due to people searching for cost-effective solutions when it comes to accommodating growing populations. Technology has had a considerable influence on how individuals search for homes and manage their properties after they are purchased. From listing platforms found online to energy efficiency software; buyers have access to ample resources that can help them make sound decisions when selecting or maintaining their home. It's evident that these technological advances persist as those in the industry keep an eye out for new trends year by year - essentially transforming the landscape of modern real estate entirely!
This Is Not Good News
As a full-time Realtor®, I always look to the future of the real estate market. Although I'm a Baby Boomer, there are many older real estate agents and we don't have to retire unless we want to. I keep up with technology, and I've been in all kinds of different real estate markets and recessions.
I knew we were going to have inventory issues because when home buyers were able to utilize the low interest rates during the crazy Seller's Market, why would they want to give those low rates up if they really don't have to? There will always be home buyers, but it's very difficult right now for first-time buyers to get a start.
So many buyers gave up when the interest rates were so low because they couldn't compete with cash buyers, over-list-price offers, buyers waiving appraisals and home inspections, etc. They signed leases for another year, some with hopes that the market would crash and prices would plummet. That didn't happen!
I spoke to a buyer last year who was incredulous at what he felt were inflated Scottsdale home prices. He felt prices would decrease by 20% in a year. I'm not sure if he has given up or will finally accept that prices are holding pretty steadily.
The Scottsdale and Greater Phoenix area remains a popular destination for all age groups. This is why inventory continues to remain low. In fact, the rental market is as competitive as resale. Once again, it is supply and demand. As many renters and homeowners are unable to afford prices in certain Phoenix markets, they are being forced to live with family or move out of the more popular areas.
I don't have a crystal ball so I can't predict what will happen in the future because this is a different market than I have witnessed. I was selling in the Great Recession from 2007-2009, but that was caused by different factors. I became proficient with foreclosures and short sales, so I was able to ride that roller coaster.
I agree that today's prices in the Scottsdale real estate market and the neighboring Greater Phoenix area are terribly high. Will there finally be an actual crash where prices take a real dip? Will interest rates remain high along with high prices? Will mortgage offerings change, such as 40-year amortization (there is already 1% down to those that qualify)? Or do we Baby Boomers have to continue dying off to release more inventory?
Housing is a large part of economic growth. If younger home buyers can't afford housing, then the real estate market will definitely change as the market is dependent on continuing first-time buyers.Posted by Judy Orr on