The Buying Trends of Millennials

A few months ago, the National Association of REALTORS® (NAR) published its 2019 Home Buyers and Sellers Generational Trends Report. This year’s report is chock full of data culled from 7,191 responses to a 129-question survey.

For the purposes of this article, we’ll home in on the largest group of current homebuyers: millennials. Having been late entering the home buying market, millennials are finally earning a decent wage and are ready to buy. What, where, and how are they buying their first home?

Millennial income and home prices

• Millennials make up 37% of homebuyers.
• Older millennials, ages 29 – 38, account for 26%, while the younger cohort, ages 21 – 28, account for 11%.
• As for first-time homebuyers, 52% of older millennials and 86% of younger millennials bought their first home in the past year.
• The median income of younger millennials is $71,200, while their older counterparts have a median income of $101,200.
• The median price of a home purchased by younger millennials was $177,000, while those 29 – 38 paid a median price of $247,000.

Primary reason for purchasing a home

• Young (60%) and older millennials (42%) say their greatest desire is to own their own home.
• The second desire cited for the older cohort was to live in a larger home, while the younger group cited a change in family situation (e.g. marriage, birth of child, divorce, etc.)
• Other reasons for purchasing included job-related relocation, the desire for a home in a better area, and a desire to establish a household.
• When it comes to the timing of their purchase, 62% of those 28 and under and 53% of those 29 – 38 believed it was “just the right time” to buy.

Why previously owned homes were purchased

Younger millennials vs. older millennials

• 94% and 88% purchased previously owned homes
• 52% and 37% purchased because of better price
• 30% and 36% cited overall value
• 21% and 25 bought for charm and character
• 12% and 14% bought due to lack of inventory of new homes

Why new homes were purchased

Younger millennials vs. older millennials

• 74% and 51% purchased to avoid renovations or problems with plumbing or electricity
• 29% and 36% bought for the ability to choose and customize design features
• 16% and 22% liked the amenities of new home construction communities
• 24% and 18% were looking for green and energy efficiency
• 11% and 22% cited the lack of inventory of previously owned homes
• 3% and 3% were looking for smart home features

Where millennials are buying

Younger millennials vs. older millennials

• 48% and 53% purchased in a suburb or subdivision
• 23% and 17% chose a small town
• 16% and 18% bought in an urban area or a central city
• 11% and %12% chose to buy in a rural area

Purchase price compared with asking price and misc.

Younger millennials vs. older millennials

• 99% and 99% median purchase price paid as percent of asking price
• 1,600 and 1,900 median square footage of homes purchased
• 84% and 92% were looking for 3 bedrooms or more
• 64% and 55% were looking for 2 full bathrooms
• 10: the median number of years both groups expect to stay in their new home

First step taken

Younger millennials vs. older millennials

• 43% and 46% looked online for properties
• 13% and 12% contacted a real estate agent
• 3% and 4% drove by neighborhoods
• 12% and 6% talked with a friend or relative about the buying process
• 1% and 4% visited open houses

Information sources used in home search

Younger millennials vs. older millennials

• 97% and 98% – Website
• 87% and 84% – Real estate agent
• 85% and 84% – Mobile or tablet search
• 46% and 57% – Open houses
• 45% and 44% – Yard sign
• 32% and 29% – Online video site
• 12% and 16% – Home builder
• 9% and 9% – Print newspaper advertisement
• 7% and 7% – Home book or magazine
• 3% and 5% – Billboard
• 2% and 4% – Relocation company
• 2% and 2% – Television

Where buyers found the home they purchased

Younger millennials vs. older millennials

• 62% and 62% – Internet
• 27% and 20% – Real estate agent

The bottom line

With 60% of 28 and younger millennials and 58% of those ages 29 – 38 saying they’re satisfied with their home buying experience, more improvements to the home buying process are still needed. Lack of inventory and rising prices continue to be a problem for millennials.

The internet is now firmly established as both the start and end point for millennials searching and ultimately finding their first home. Millennial buying trends emphasize the important role of technology and service. Next time we’ll take a closer look at millennial homebuyers and their interactions with real estate agents.